Business High School

22) the actual information pertains to the month of june. as a part of the budgeting process, great cabinets company developed the following static budget for june. great cabinets is in the process of preparing the flexible budget and understanding the results. actual flexible static results budget budget sales volume (in units) 18,000 23,000 sales revenues $900,000 $ $1,150,000 variable costs 360,000 $ 463,910 contribution margin 540,000 $ 686,090 fixed costs 275,300 $ 269,500 operating profit $264,700 $ $416,590 the flexible budget will report for variable costs. (round any intermediate calculations to the nearest cent, and round your final answer to the nearest dollar.)

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Answer 1

The flexible budget will help Great Cabinets Company to understand the impact of changes in sales volume on the overall budget and make better decisions in the future.

Great Cabinets Company's static budget for June was developed based on the assumption of a sales volume of 18,000 units. However, the actual sales volume turned out to be higher at 23,000 units. As a result, the flexible budget will report for variable costs, which will help to understand the impact of changes in sales volume on the overall budget. From the given information, the actual sales revenues for June were $1,150,000, which is higher than the static budget of $900,000. The actual variable costs were $463,910, which is higher than the static budget of $360,000. The contribution margin was $686,090, which is higher than the static budget of $540,000. However, the fixed costs were slightly lower than the static budget at $269,500 compared to $275,300. The flexible budget will report for variable costs by adjusting the budgeted variable costs based on the actual sales volume. This will help to understand the impact of changes in sales volume on variable costs and the resulting contribution margin and operating profit. The flexible budget will show that variable costs increase as sales volume increases, and the resulting contribution margin and operating profit will also increase.

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Related Questions

Please complete the staement of cash flows and statement ofchanges in equity. Thanks!

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To complete the statement of cash flows, a company must identify its cash inflows and outflows during a particular period.

Completing the statements involves analyzing the company's financial transactions, including sales and expenses, investments and financing activities, and changes in working capital accounts. The statement of cash flows typically includes three sections: operating activities, investing activities, and financing activities.

The operating activities section shows the cash flows generated or used in the company's primary operations. The investing activities section shows the cash flows related to long-term investments, such as property, plant, and equipment.

The financing activities section shows the cash flows related to the company's financing sources, such as issuing stocks or borrowing funds.

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A company just issued $287000 of perpetual 10% debt and used the proceeds to repurchase stock. The company expects to generate 118000 of EBIT in perpetuity. The company distributes all its earnings as dividends at the end of each year. The firm’s unlevered cost of capital is 15% and the tax rate is 40%. Use APV method to calculate the value of the company with leverage.

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The value of the company with leverage using APV method is $1,315,000.

Given a company just issued $287000 of perpetual 10% debt and used the proceeds to repurchase stock. The company expects to generate 118000 of EBIT in perpetuity. The company distributes all its earnings as dividends at the end of each year. The firm’s unlevered cost of capital is 15% and the tax rate is 40%.


The APV (Adjusted Present Value) method is a way to evaluate the value of a business or project. It is used to determine the effect of financial leverage on a company's equity value, using the Net Present Value (NPV) approach.

To calculate the value of the company with leverage using the APV (Adjusted Present Value) method, we can use the following formula: APV = Unlevered Value of Firm + Present Value of Tax Shield from Debt

Here, Unlevered Value of Firm = 118,000 / (15% - 10%) = $2,160,000
Present Value of Tax Shield from Debt = 287,000 x 40% x (1/1+15%) = $34,776
Therefore, APV = $2,160,000 + $34,776 = $2,194,776

This is the value of the company with leverage using the APV method.

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despite the obvious difference in purchasing behavior, uses, and
sizes of transaction in marketing to businesses and marketing to
consumer segmentation can be used for B2B and B2C. true or false

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The statement is True. Despite the obvious difference in purchasing behaviour, uses, and sizes of transactions in marketing to businesses and marketing to consumer segmentation can be used for B2B and B2C.

B2B stands for 'business to business' while B2C is 'business to consumer'. B2B web-based business uses online stages to offer items or administrations to different organizations. B2C internet business targets individual shoppers. While there are contrasts in purchasing behaviour and transaction sizes somewhere in the range of B2B and B2C promoting, division can in any case be utilized in both. Segmentation is a course of partitioning a market into more modest gatherings of customers or organizations with comparative necessities or qualities, and afterwards formulating explicit showcasing systems to focus on each gathering. Both B2B and B2C showcasing can profit from division, as it considers more designated and viable advertising endeavours.

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