# Raffel jeans management decides that the 16,000 units is most likely output volume, and sets the static budget based on this sale and production level

Project 1 :

Following is a monthly given income statement for Raffel jeans, a small newly started fashion jeans manufacturer business. The pro forma analysis was prepared at the beginning of the month and considered three alternative sales levels. The company has no variable marketing costs.

 Income statement line item Budgeted amount per unit Pre-forma analysis forAlternative output levels 10,000 units 20,000 units 30,000 units Revenue \$35 \$350,000 \$700,000 \$1,050,000 Variable costs:  Material  Labor  Overhead  Total 13   8   5 26 130,000  80,000 50,000 260000 260,000 160,000 100,000 520,000 3,90,000 240,000 150,000 780,000 Contributing margin: \$10 100,000 200,000 300,000 Fixed costs: Manufacturing  Overhead Marketing cost  Total fixed cost  Operating income 100,000 50,000 150,000 (\$50,000) 100,000 50,000 150,000 \$50,000 100,000 50,000 150,000 \$150,000

Since by definition, fixed costs are not expected to change as volume of output changes within the relevant range, fixed costs remain the same at all three projected levels of output. Revenue and variable costs vary with output in a linear fashion. Hence, when output increases 100% from10,000 units to 20,000 units, revenue, each line-item for variable costs, and contribution marginal increase 100%

Raffel jeans management decides that the 16,000 units is most likely output volume, and sets the static budget based on this sale and production level

Using the above given data, prepare and compute in an Excel sheet using different tabs of the sheet for each one of the following calculations;

• Static budget for 10,000 units
• Actual result for 16,000 units
• Operating income
• Static budget variance
• Prepare flexible budget for end on the month
• Variation in operating income
• Actual results
• Flexible budget variance

You must attach the screen shot of the task performed and hand out a print out to the assessor.