Chapter_10_Handout_Solution

Chapter_10_Handout_Solution - Acc 200 Chapter 10 Handout...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Acc 200 Chapter 10 Handout Question : What is a static budget? Answer: A budget prepared at one expected level of production Is it fair to compare a static budget to actual results? See the following comparison. (Static Budget) vs. (Actual Results) @ 2,000 units @ 2,800 units Sales rev. $200,000 $280,000 VC: DM 18,400 27,000 DL 60,000 85,800 VOH 12,000 23,400 FC 30,000 30,000 Net Inc $79,600 $113,800 Question: What is a flexible budget? Answer: A budget prepared at the actual level of production. Instead of preparing a budget for the expected level of production (2,000 units), a flexible budget would provide the budgeted costs for the actual level of production (2,800 units). Is it better to compare a flexible budget to actual results? PREPARE A FLEXIBLE BUDGET (Flexible Budget) @ 2,800 units Calculations: Sales rev. $280,000 $200,000/2,000 units x 2,800 units VC: DM 25,760 $18,400/2,000 units x 2,800 units DL 84,000 $60,000/2,000 units x 2,800 units VOH 16,800 $12,000/2,000 units x 2,800 units FC 30,000 No difference – this is a fixed cost Net Inc $123,440 **Notice that fixed costs did not change – remember that total fixed costs do not change with changes in levels of production as long as the relevant range is the same.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Question: What is a variance? Answer:
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Chapter_10_Handout_Solution - Acc 200 Chapter 10 Handout...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online