Author Question: SnoGo, Inc., produces plastic tray used in cafeterias and for snow sledding.The company's static ... (Read 86 times)

james · **on:** Jan 5, 2020

SnoGo, Inc., produces plastic tray used in cafeterias and for snow sledding.
The company's static budget income statement for January follows. It is based on expected sales volume of 5,500 trays.

SnoGo Inc

Static Budget Income Statement

Month Ended January 31

Sales revenue

$16,500

Variable expenses:

Cost of goods sold

$6,325

Sales commissions

1,375

Utilities expense

1,100

Fixed expenses:

Salary expense

3,250

Depreciation expense

2,000

Rent expense

1,000

Utilities expense

500

Total expenses

$ 15,550

Operating income

$950

SnoGo's manufacturing capacity is 6,250 trays. If actual volume exceeds 6,250 trays, the company must expand the plant. In that case, salaries will increase by 10%, depreciation by 15%, and rent by $800. 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 trays.

momolu · **Reply #1 on:** Jan 5, 2020

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