Windsor Limited makes and sells a single product. The company employs a flexible budgeting system that covers a relevant range from 20,000 units to 25,000 units and a just in time inventory system. Budget data for April, based on 22,000 units, are as follows:
$\begin{array} { | l | r | }
\hline \text { Prime costs } & \$ 30 \text { per unit } \
\hline \text { Manufacturing overhead } & \$ 132,000 \text { plus } \$ 3 \text { per unit } \
\hline \text { Selling and administrative expenses } & \$ 30,000 \text { plus } \$ 2 \text { per unit } \
\hline \text { Selling price } & \$ 60 \text { per unit } \
\hline
\end{array}$

-What is the company's master budget operating income (loss)for April?

Question

Windsor Limited makes and sells a single product. The company employs a flexible budgeting system that covers a relevant range from 20,000 units to 25,000 units and a just in time inventory system. Budget data for April, based on 22,000 units, are as follows:
$\begin{array} { | l | r | } 
\hline \text { Prime costs } & \$ 30 \text { per unit } \
\hline \text { Manufacturing overhead } & \$ 132,000 \text { plus } \$ 3 \text { per unit } \
\hline \text { Selling and administrative expenses } & \$ 30,000 \text { plus } \$ 2 \text { per unit } \
\hline \text { Selling price } & \$ 60 \text { per unit } \
\hline
\end{array}$

-What is the company's master budget operating income (loss)for April?

Quizplus · Accepted Answer

To calculate the master budget operating income for April, we need to calculate the total revenue, total costs, and then subtract the total costs from the total revenue.1. **Total Revenue**: Selling price per unit is $60, and the budget is based on 22,000 units. So, total revenue = $60 * 22,000 = $1,320,000.2. **Total Costs**:    - Prime costs = $30 per unit * 22,000 units = $660,000.   - Manufacturing overhead = $132,000 + ($3 per unit * 22,000 units) = $132,000 + $66,000 = $198,000.   - Selling and administrative expenses = $30,000 + ($2 per unit * 22,000 units) = $30,000 + $44,000 = $74,000.   - Total costs = Prime costs + Manufacturing overhead + Selling and administrative expenses = $660,000 + $198,000 + $74,000 = $932,000.3. **Operating Income**: Total revenue - Total costs = $1,320,000 - $932,000 = $388,000.Therefore, the company's master budget operating income for April is $388,000.

Windsor Limited Makes and Sells a Single Product -What Is the Company's Master Budget Operating Income (Loss)for April