Outdoor Outfitters provided a flexible budget for production levels of 70,000 and 80,000 units that showed costs of goods sold and operating expenses varying directly with sales. The document asks to complete the flexible budget for Outdoor Outfitters at a production level of 78,200 units. Using the information provided, the assistant calculates sales of $1,564,000, costs of goods sold of $938,400, operating expenses of $402,800, operating income of $222,800, income taxes of $66,840, and net income of $155,960.

1. Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of
activity as shown below. Complete Outdoor Outfitters?s flexible budget at the 78,200-unit level
of activity. Assume that the cost of goods sold and variable operating expenses vary directly with
sales and that income taxes remain at 30 percent of operating income.
Solution
selling price per unit = 1,400,000 / 70,000 or 1,600,000/80,000 =$ 4per unit
Cost of goods sold = 840000 /1400000 or 960000 /1600000 = 60%
operating expenses = (370000-90000)/ 700000 = $ 4 per unit  or (410000-90000)/80000 = $
4per unit
so 90000+ 4per unit
78200 UNITS
sales [78200*20] 1,564,000
cost of goods sold (60*sales) (938,400)
Gross profit 625,600
Operating expenses (90000 + [4*units sold] (402,800)
Operating income 222,800
Income tax ( 30% of operating income) (66,840)
Net income 155,960