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22 August, 14:06

In September, Larson Inc. sold 40,000 units of its only product for $240,000 and incurred a total cost of $225,000, of which $25,000 is fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U. The total sales revenue in the master budget for September was? The total number of budgeted units reflected in the master budget for September was?

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  1. 22 August, 16:08
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    total sales revenue = $375,000

    master budget sales units = 50,000

    Explanation:

    The computation of total sales revenue in the master budget for September and total number of budgeted units reflected in the master budget for September is shown below:-

    Actual Flexible budget Master

    Units 40,000 40,000 50,000 Units

    Sales $240,000 $60,000 U $300,000 $75,000 U $375,000

    Variable

    cost $200,000 $8,000 U $192,000 $48000 F $240,000

    Contribution

    margin $40,000 $68,000 U $108,000 $27,000 U $135,000

    Fixed cost $25,000 $5,000 F $30,000 0 $30,000

    Net income $15,000 $63,000 U $78,000 $27,000 U $105,000

    So total sales revenue = $135,000 * $300,000 : $108,000

    = $375,000

    Sales price per unit = $300,000 : 40,000

    = 7.5

    As per master budget sales units = 375000 : 7.5

    = 50,000 units
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