Casco Co.planned to produce and sell 40,000 units.At that volume level,variable costs are determined to be $320,000 and fixed costs are $30,000.The planned selling price is $10 per unit.Casco actually produced and sold 42,000 units.
Required:
Using a contribution margin format:
a.Prepare a fixed budget income statement for the planned level of sales and production.
b.Prepare a flexible budget income statement for the actual level of sales and production.
c.Which budget should we use to compare to actual results and why?

Question

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The Answer of Casco Co.planned to produce and sell 40,000 units.At that volume level,variable costs are determined to be $320,000 and fixed costs are $30,000.The planned selling price is $10 per unit.Casco actually produced and sold 42,000 units.
Required:
Using a contribution margin format:
a.Prepare a fixed budget income statement for the planned level of sales and production.
b.Prepare a flexible budget income statement for the actual level of sales and production.
c.Which budget should we use to compare to actual results and why?

Casco CoPlanned to Produce and Sell 40,000 Units