Static and Flexible Budgets in Excel Spreadsheet
				Static
				Budget		Flexible Budget________________________________________________________ ____________________________
Number of Units				18,000___			16,000		17,000		18,000		19,000		20,000
		Per Unit
		Standards
Sales Revenue		$80,000		$1,440,000			$1,280,000		$1,360,000		$1,440,000		$1,520,000		$1,600,000
Variable Manuf Costs
Materials		$12.00		216,000			192,000		204,000		216,000		228,000		240,000
Labor		16.80		302,400			268,800		285,600		302,400		319,200		336,000
Overhead		5.60		100,800			88,600		95,200		100,800		106,400		112,000
Variable G. S. & A.		15.00		270,000			240,000		255,000		270,000		285,000		300,000
Contribution Margin				550,800			488,600		520,200		550,800		581,400		612,000
Fixed Costs				291,600			291,600		291,600		291,600		291,600		291,600
Net Income				$256,200			$198,000		228,600		258,200		289,800		320,000

What happens if the number of units sold is different from the planned volume? In other words, what happens to net income if Melrose sells more or less than 18,000 units? Managers frequently use flexible budgets to examine such what if scenarios. Flexube budget income statements for Melrose at sales volume of 16,000, 17,000, 18,000, 19,000, and 20,000 are highligted with blue shading in Exhibit 8.1. Prepare a flexible budget.