Question - Trina makes handmade leis in Hawaii which she sells to local tourists. She anticipates August to be a busy month with the sale of 500 leis. She has prepared the following static budget for August:
Sales revenue (500 units) $5000
Variable costs:
Direct materials 1000
Direct labour 1000
Overhead 475
Fixed costs 200
Net income $2425
During August, Trina actually produced and sold 400 leis. What should be Trina's net income in August based on a flexible budget?
$2325
$1820
$1825
$1325