Question

Exercise 6-5 Bonita manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 cances, 3,000 canoes, and 3,500 cances. Canoes sell for $809 each. The standard variable cost information for a canoe is as follows. $338 155 Direct materials Direct labor Variable overhead Utilities Indirect material Indirect labor Tots 35 30 60 wy 5518 Annual fixed overhead cost is expected to be Maintenance Depreciation Insurance Rent Total $ 18,510 39,800 25,870 29,290 $113,570 Alexis King chose to prepare a static budget based on sales of 3,000 canes. Actual sales were 3,100 cances at a price of $859 each. The company incurred the following costs for the year: Direct material $1,036,300 Direct labor 453,800 Variable overhead 399,400 Foxed Overhead 120.870 Total $2,010,370 Prepare a performance report for the year that shows the flexible budget and sales volume variances (If aperating income is negative, enter amounts using a negative sign preceding the number -45 or parentheses g. (45). Round answers to decimal places g. 125. If wariance is rare, select "Nor Applicable and enter for the amounts.) Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget MacBook Pro

Answer 1

	Actual Results	Flexible Budget Variance		Flexible Budget	Sales Volume Variance		Static Budget
Unit sales	3100	0	Not Applicable	3100	100	Favorable	3000
Sales revenue	2662900	155000	Favorable	2507900	80900	Favorable	2427000
Less: Variable costs:
Direct materials	1036300	11500	Favorable	1047800	33800	Unfavorable	1014000
Direct labor	453800	26700	Favorable	480500	15500	Unfavorable	465000
Variable overhead	399400	11900	Unfavorable	387500	12500	Unfavorable	375000
Total variable costs	1889500	26300	Favorable	1915800	61800	Unfavorable	1854000
Contribution margin	773400	181300	Favorable	592100	19100	Favorable	573000
Fixed costs	120870	7300	Unfavorable	113570	0	Not Applicable	113570
Operating income	652530	174000	Favorable	478530	19100	Favorable	459430