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Casco Co. planned to produce and sell $40,000 unites. At that volume level, variable costs are determined to be $320,000 and fixed costs are $30,000. The planned selling price is $10 per unit. Casco actually produced and sold 42,000 units.
Required:
Using a contribution margin format:
a) Prepare a fixed budget income statement for the planned level of sales and production.
b) Prepare a fixed budget income statement for the actual level of sales and production.
c) Which budget should we use to compare to actual results and why?
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