Flexible budget compute variance for operating income

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Unformatted text preview: = $6,400 FAVORABLE $6,400 Compute the flexible budget Compute variance for operating income (note if favorable or unfavorable): unfavorable): Flexible budget Flexible variance for operating variance for income: $16,400 – 18,000 (from previous slide) = $1,600 UNFAVORABLE UNFAVORABLE Units sold Revenues Variable Costs Contribution Margin Fixed Costs Operating Income Units sold Revenues (12,000 * $10) Variable Costs (12,000 * $6) Contribution Margin Fixed Costs Operating Income Chapter 7 Flexible Budgets, Direct Cost Variances, and Management Control and Compute the sales volume variance: Compute $18,000 - $10,000 = $8,000 favorable variance $18,000 Units sold Revenues Variable Costs Contribution Margin Fixed Costs Operating Income Static Budget 10,000 100,000 (60,000) 40,000 (30,000) 10,000 Units sold Revenues (12,000 * $10) Variable Costs (12,000 * $6) Contribution Margin Fixed Costs Operating Income Flexible Budget 12,000 120,000 (72,000) 48,000 (30,000) 18,000 Chapter 7 Flexible Budgets, Direct Cost Variances, and Management Control and Compute the selling price variance $119,200 - $120,000 = $800 unfavorable $119,200 Actual Results 12,000 119,200 Flexible Budget 12,000 120,000 Units sold Revenues Units sold Revenues (12,000 * $10) Chapter 7 Flexible Budgets, Direct Cost Variances, and Management Control and Price variances (rate variances) Efficiency variances (usage variances) Chapter 7 Flexible Budgets, Direct Cost Variances, and Management Control and Decorator’s D...
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