Answer:
To calculate the budgeted income from product A using a flexible budget for 13,700 units, we need to consider the following components: sales revenue, variable costs, and fixed costs.
Sales Revenue:
The sales revenue is determined by multiplying the sales price per unit by the production level. In this case, the sales price is $12 per unit, and the production level is 13,700 units.
Sales Revenue = Sales Price per Unit × Production Level
Sales Revenue = $12 × 13,700
Sales Revenue = $164,400
Variable Costs:
The variable costs are given as $5 per unit. To determine the total variable costs, we multiply the variable cost per unit by the production level. Using the same production level as before (13,700 units):
Variable Costs = Variable Cost per Unit × Production Level
Variable Costs = $5 × 13,700
Variable Costs = $68,500
Fixed Costs:
The fixed costs per unit are also given as $5. Since fixed costs do not change with the level of production, the total fixed costs will remain the same regardless of the number of units produced.
Fixed Costs = Fixed Costs per Unit = $5
Budgeted Income:
To calculate the budgeted income, we subtract the total variable costs and total fixed costs from the sales revenue.
Budgeted Income = Sales Revenue - (Variable Costs + Fixed Costs)
Budgeted Income = $164,400 - ($68,500 + $5)
Budgeted Income = $164,400 - $68,505
Budgeted Income = $95,895
Therefore, the budgeted income from Product A, using a flexible budget for 13,700 units, is $95,895.