Prepare a flexible budget for Paradise Marina that shows a detailed budget for its static budget and its actual sales volume of 60,000 units. Use the contribution margin approach.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![2) Paradise Marina LLC static budget for the year is shown below:
Sales (50,000 units)
Cost of Goods Sold:
Direct Material
Direct Labor
Overhead (includes $2 per unit Variable cost)
Gross Profit
Selling Expenses
Sales Commissions (Variable)
Rent (Fixed)
Insurance (Fixed)
General and administrative expenses
Salaries (fixed)
Rent (Fixed)
Depreciation (Fixed)
Sales
Variable Cost:
Direct Materials
Direct Labor
Variable OH
Sales Commission
Total Variable Cost
Contribution Margin
Prepare a flexible budget for Paradise Marina that shows a detailed budget for its static budget and its
actual sales volume of 60,000 units. Use the contribution margin approach.
Fixed Cost:
Fixed OH
Rent Expense - Selling
Insurance Expense
Salaries Expense
Rent Expense - General
Depreciation Expense
Total Fixed Cost
Income from Operations
$125,000
400,000
180,000
50,000 units
50,000
70,000
35,000
90,000
40,000
30,000
$1,300,000
705,000
595,000
315,000
$ 280,000
60,000 units](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcc0c5400-cfd0-47f3-aef7-2f42c24ac31c%2Fed509d30-b939-472b-b6ba-74e636a8ce10%2F0fy80zj_processed.jpeg&w=3840&q=75)
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