Question

Help, please. I have test

Problem 5 (10 points) Answer the following questions using the information below (show calculations) Callsh Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: Sales-Volume Variances Flexible Budget 450,000 Flexible Budger Variances Static Budget Actual Results 450,000 Units sold 412,500 Revenues (B) $168,320 $5,600 U (A) $4,000 F Variable costs (C) $72,800 $63,440 $9,360 F $800 U Fixed costs $33,120 $36,560 $3,440 F $36,560 Operating $70,960 income $64,320 $60,560 (E) (D a) b) c) d)

Answer 1

Flexible Budget Variance Sales-Volume Variances Units sold Revenues Variable costs Fixed costs Operating income Actual Results 450,000 $ 168,320 64,240 33,120 70,960 4,000 F 800 U 3,440 F 6,640 F Flexible budget 450,000 $ 164,320 63,440 36,560 64,320 5,600 U 9,360 F - 3,760 F Static Budget 412,500 $ 169,920 72,800 36,560 60,560 3.76 Working Notes A) Flexible Budget Revenue Actual Sales - Favorable Flexible Budget Variance 168,320 - 4,000 164,320 B) Static Budget Revenue Flexible Budget Sales + Unfavorable Sales-volume Variance 164,320 + 5,600 169,920 C) Actual variable costs Flexible Budget cost + Unfavorable Flexible Budget Variance 63,440 + 800 64,240 D) Operating Income flexible budget variance Actual Results - Flexible Budget 70,960 - 64,320 6,640 F As actual operating income was more than the flexible budget income hence it is favorbale variance. E) Operating income Sales- volume variance Flexible Buget - static budget 64,320-60,560 3,760 F As flexible budget operating income was more than the static budget hence it is favorable variance.