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    Computing Net Income Using A Flexible Budget

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    The Pixson Company's budgeted income statement for 2007 follows:

    Sales (8,000 units) $128,000
    Direct materials 27,600
    Direct labor 6,000 Variable overhead 16,800
    Fixed Overhead 15,000
    Fixed selling & administrative expenses 30,000
    Net Income $32,600

    A flexible budget for 12,000 units would show net income of:

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    Solution Preview

    Sales Revenues Per Unit=$128,000/8,000=$16
    Direct Materials Per Unit=$27,600/8,000 =$ 3.45
    Direct Labor Per Unit =$6,000/8,000 =$ .75
    Variable Overhead Per ...

    Solution Summary

    This solution illustrates how to compute a company's net income at a given level of production and sales using its flexible budget.