(Answered) Paragon inc normally manufactures between 36000 and 42000

Management Studies

Paragon Inc. normally manufactures between 36,000 and 42,000 units each month. A static budget based on 36,000 units and actual results for April follows:

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Conversations with Paragon's accountant revealed the following information:

April's production totaled 35,000 units.
Supervision, insurance and taxes, and depreciation are fixed costs.
Should production fall below 36,000 units, supervision costs are expected to be reduced by $20,000 because of temporary layoffs.

Instructions:

a. Prepare a flexible budget for 36,000, 39,000, and 42,000 units of activity.

b. Prepare a performance report for April that can be used to judge Paragon's success or failure in meeting budgeted targets. Comment on your findings.

c. Explain the flexibility that is associated with a flexible budget.

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M91699447
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