ACCT208 Lecture Notes - Lecture 8: Three Steps
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The following budgeted and actual volume and cost data are forJuly of this year.
Prepare a flexible budget analysis for July of this year byfilling in the Flexible budget amounts based on the actual salesvolume and calculating the variances. DON’T FORGET TOINDICATE WHETHER THEY ARE FAVORABLE OR UNFAVORABLE!
Budget (per unit) | Budget | Actual | FLEXIBLE BUDGET | Variance | ||
Volume | 40,000 | 40,000 | 36,000 | 36,000 | ||
Sales Revenue | $70 per unit | $2,800,000 | $2,520,000 | |||
Budgeted manufacturing costs: | ||||||
Variable costs: | ||||||
Direct materials | $35.00 | $1,400,000 | $1,350,000 | |||
Direct labor | 15.00 | 600,000 | 580,000 | |||
Overhead | 5.00 | 200,000 | 180,000 | |||
Total fixed overhead costs | $450,000 | 450,000 | 406,000 | |||
Net Income before taxes | $150,000 | 4,000 |
E23-16: Preparing a flexible budget performancereport
Cole Pro Company managers received the following incompleteperformance report:
Cole Pro Company Flexible Budget Performance Report For the year ended July 31, 2016 | |||||
Actual results | Flexible budget variance | Flexible Budget | Sales Volume Variance | Static Budget | |
Units | 39,000 | (a) | 39,000 | 8,000 F | (g) |
Sales revenue | $214,000 | (b) | $214,000 | $19,000 F | (h) |
Variable Expenses | 86,000 | (c) | 80,000 | 8,000 U | (i) |
Contribution Margin | 128,000 | (d) | 134,000 | 11,000 F | (j) |
Fixed Expenses | 108,000 | (e) | 103,000 | 0 | (k) |
Operating Income | 20,000 | (f) | 31,000 | 11,000 | (l) |
Complete the performance report. Identify the employee groupthat may deserve praise and the group that may be subject tocriticism. Give your reasoning.
Please list the step by step process. Thank you!
Business Solutions’ second quarter 2012 fixed budget performancereport for its computer furniture operations follows. The $156,660budgeted expenses include $106,500 in variable expenses for desksand $17,160 in variable expenses for chairs, as well as $33,000fixed expenses. The actual expenses include $34,400 fixedexpenses. |
Fixed Budget | Actual Results | Variances | |||||
Desk sales (inunits) | 142 | 148 | |||||
Chair sales (inunits) | 66 | 74 | |||||
Desk sales (indollars) | $ | 177,500 | $ | 183,520 | $ | 6,020 F | |
Chair sales (indollars) | $ | 35,640 | $ | 41,070 | $ | 5,430 F | |
Total expenses | $ | 156,660 | $ | 165,010 | $ | 8,350 U | |
Income fromoperations | $ | 56,480 | $ | 59,580 | $ | 3,100 F | |
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