Question

Xion Co budgets a selling price of $81 per unit, variable costs of $35 per unit, and total fixed costs of $281,000. During June, the company produced and sold 11,900 units and incurred actual variable costs of $362,000 and actual fixed costs of $296,000. Actual sales for June were $995,000 Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance) XION CO. Flexible Budget Report For Month Ended June 30 Flexible Budget Actual Results Variances Fav/Unf.

Answer 1

XION CO.
Flexible Budget Report
For Month Ended June 30
	Flexible Budget [Refer working note]	Actual Results	Variances	Fav./Unf.
Sales	$963,900	$995,000	$31,100	Favorable
Variable expenses	$416,500	$362,000	$54,500	Favorable
Contribution Margin   [Sales - Variable expenses]	$547,400	$633,000	$85,600	Favorable
Fixed expenses	$281,000	$296,000	$15,000	Unfavorable
Income from operations   [Contribution margin - Fixed expenses]	$266,400	$337,000	$70,600	Favorable

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Working note - Flexible budget
Sales                           [Actual units sold x budgeted selling price per unit = 11,900 units x $81]	$963,900
Variable expenses        [Actual units sold x budgeted variable expense per unit = 11,900 units x $35]	$416,500
Contribution Margin     [$963,900 - $416,500]	$547,400
Fixed expenses	$281,000
Income from operations   [$547,400 - $281,000]	$266,400