chapter7%20%26%20%208%20homework - 7-19 1(30 min Flexible budget working backward Variance Analysis for The Clarkson Company for the year ended Units

chapter7%20%26%20%208%20homework - 7-19 1(30 min Flexible...

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7-19 (30 min.) Flexible budget, working backward. 1. Variance Analysis for The Clarkson Company for the year ended December 31, 2012 Actual Results (1) Flexible- Budget Variances (2)=(1) - (3) Flexible Budget (3) Sales-Volume Variances (4)=(3) - (5) Static Budget (5) Units sold 130,000 0 130,000 1 0,000 F 120,000 Revenues $715,000 $260,000 F $455,000 a $35,000 F $420,000 Variable costs 515 ,000 255 ,000 U 260 ,000 b 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 $ 6 0,000 $ 15,000 U $ 75,000 $ 1 5,000 F $ 60 ,000 a 130,000 × $3.50 = $455,000; $420,000 120,000 = $3.50 b 130,000 × $2.00 = $260,000; $240,000 120,000 = $2.00 2. Actual selling price: $715,000 ÷ 130,000 = $5.50 Budgeted selling price: 420,000 ÷120,000 = $3.50 Actual variable cost per unit: 515,000 ÷130,000 = $3.96 Budgeted variable cost per unit: 240,000 ÷120,000 = $2.00 3. A zero total static-budget variance may be due to offsetting total flexible-budget and total sales-volume variances. In this case, these two variances exactly offset each other: Total flexible-budget variance $15,000 Unfavorable Total sales-volume variance $15,000 Favorable

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