9. Flexible Budgets

Which of the following is a significant concern when comparing a fixed budget to the actual results of a company?

Clio’s Calculators sells their basic calculator for \$25. Their budgeted manufacturing costs are:

• Direct materials: \$3 per unit
• Direct labor: \$10 per unit
• Variable manufacturing overhead: \$3 per unit
• Fixed manufacturing overhead: \$15,000

At the end of the period, actual production was 5,000 units. What would be the Net Operating Income that Clio’s would report on a flexible budget?