McElroy Company has prepared the following master budget for 2013. Although McElroy has the capacity to manufacture 50,000 units, management expected the likely demand for its product to be 40,000 units in 2013; as such, it prepared the master budget to manufacture and sell 40,000 units. In early January 2014, the company was pleasantly surprised to find out that it manufactured and sold 45,000 units in 2013. Required:
Prepare the flexible budget (FB) for the actual operating level achieved in 2013.

Question

McElroy Company has prepared the following master budget for 2013. Although McElroy has the capacity to manufacture 50,000 units, management expected the likely demand for its product to be 40,000 units in 2013; as such, it prepared the master budget to manufacture and sell 40,000 units. In early January 2014, the company was pleasantly surprised to find out that it manufactured and sold 45,000 units in 2013.  Required:
Prepare the flexible budget (FB) for the actual operating level achieved in 2013.

Quizplus · Accepted Answer

The Answer of McElroy Company has prepared the following master budget for 2013. Although McElroy has the capacity to manufacture 50,000 units, management expected the likely demand for its product to be 40,000 units in 2013; as such, it prepared the master budget to manufacture and sell 40,000 units. In early January 2014, the company was pleasantly surprised to find out that it manufactured and sold 45,000 units in 2013.  Required:
Prepare the flexible budget (FB) for the actual operating level achieved in 2013.

McElroy Company Has Prepared the Following Master Budget for 2013