Question

ames Manufacturing had the following information available for July:

	Actual Results				Flexible Budget Variance				Flexible Budget				Sales Activity Variance				Master Budget
Units		12,000								?				3,000	U			?
Sales revenue		?			$	16,800	F			?				?				?
Less:
Variable manufacturing costs	$	88,500							$	92,000				?			$	111,000
Variable marketing and administrative		?			$	5,500	U			?			$	6,200	F		$	33,000
Contribution margin	$	52,000				?				?			$	6,300	U			?

What was James’s flexible budget contribution margin for July?

Multiple Choice

• $52,000

• $58,300

• $43,500

• $37,200

Answer 1

$ Variable Marketing and administrative (Master Budget) Less: Favorable Variable marketing and administrative Sales activity variance Variable Marketing and administrative (Flexible Budget) Add: Unfavorable variable marketing and administrative Flexible Budget variance Variable Marketing and administrative (Actual Results) $ 33,000 (6,200) 26,800 5,500 32,300 $ 52,000 Actual Contribution Margin Add: Variable Costs Variable Marketing and administrative (Actual Results) Variable manufacturing costs (Actual Results) Actual Sales Revenue 32,300 88,500 172,800 $ $ Actual Sales Revenue Less: Favorable Sales flexible budget variance Flexible Sales Revenue 172,800 (16,800) 156,000 $ $ 156,000 Flexible Sales Revenue Less: Flexible Variable Costs Variable manufacturing costs (Flexible Budget) Variable Marketing and administrative (Flexible Budget) Flexible Budget Contribution Margin (92,000) (26,800) 37,200 $ Flexible Budget Contribution Margin $ 37,200