Author Question: SnoGo, Inc., produces ergonometric tool used for snow removal. The company's static budget income ... (Read 41 times)

MirandaLo · **on:** Jan 5, 2020

SnoGo, Inc., produces ergonometric tool used for snow removal. The company's static budget income statement for January follows. It is based on expected sales volume of 5,500 tools.

SnoGo Inc

Static Budget Income Statement

Month Ended January 31

Sales revenue

$82,500

Variable expenses:

Cost of goods sold

$31,625

Sales commissions

6,875

Utilities expense

5,500

Fixed expenses:

Salary expense

15,000

Depreciation expense

10,000

Rent expense

5,000

Utilities expense

2,500

Total expenses

$ 76,500

Operating income

$6,000

SnoGo's manufacturing capacity is 6,250 tools. If actual volume exceeds 6,250 tools, the company must expand the plant. In that case, salaries will increase by 10%, depreciation by 15%, and rent by $1,500. Fixed utilities will be unchanged by any volume increase.

Prepare flexible budget income statements for the company, showing output levels of 5,500, 6,000 and 6,500 tools.

kescobar@64 · **Reply #1 on:** Jan 5, 2020

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