Chapter7 - Dianne Estrada 7-19 Flexible budget, working...

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Dianne Estrada 7-19 Flexible budget, working backward. 1. Units Sold 130,000 0 130,000 10,000 F 120,000 Revenues ### $260,000 F $455,000 $35,000 F ### Variable Costs 515,000 255,000 U 260,000 20,000 U 240,000 Contribution Margin 200,000 5,000 F 195,000 15,000 F 180,000 Fixed Costs 140,000 20,000 U 120,000 0 120,000 Operating Income $60,000 $15,000 U $75,000 $15,000 F $60,000 $15,000 U $15,000 F Total flexible-budget variance Total sales volume varian $0 Total static-budget variance 130,000 × $3.50 = $455,000 ($420,000 / 120,000 = $3.50) 130,000 × $2.00 = $260,000 ($240,000 / 120,000 = $2.00) Actual selling price: $715,000 / 130,000 = $ 5.50 Budgeted selling price: 420,000 / 120,000 = $ 3.50 Actual varible cost per unit: 515,000 / 130,000 = $ 3.96 Budgeted variable cost per unit: 240,000 / 120,000 = $ 2.00 3. The $0 total static-budget variance could be due to the total flexible-budget variance and total sales volume variance offsetting eachother. Also, the actual variable costs increased causing an unfavorable flexible budget variable cost variance. This could be due to increase prices. The increase in units sold also contributed to the favorable result. The important less is that it is very important to analyize the data in detail. Actual Results (1) Flexible- Budget Variabnces (2)=(1)-(3) Flexible Budget (3) Sales- Volume Variances (4)=(3)- (5) Static Budget (5)
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Dianne Estrada 7-30 Flexible budget, direct materials and direct manufacturing labor variances. 1.
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Chapter7 - Dianne Estrada 7-19 Flexible budget, working...

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