a.
Units | Budgeted amounts per unit | Actual results | Flexible budget variance | Flexible budget | Sales volume variance | Static Budget | ||
125,000 | 125,000 | 122,000 | ||||||
Sales revenue | 40 | 4750000 | 250000 | U | 5000000 | 120000 | F | 4880000 |
Variable costs | 9.9 | 1312500 | 75000 | U | 1237500 | 29700 | U | 1207800 |
Contribution margin | 3437500 | 325000 | U | 3762500 | 90300 | F | 3672200 | |
Fixed expenses | 3,000,000 | 50,000 | F | 3,050,000 | 0 | 3,050,000 | ||
Operating income | 437500 | 275000 | U | 712500 | 90300 | F | 622200 |
b. The flexible budget variances are all unfavorable since the actual selling price is less than the budgeted selling price. Also the variable costs is higher than the budgeted cost per unit. However, only the fixed expenses are less than the budgeted costs. Hence, the managers have done a poor job in controlling the variances i.e. the sales price and variable cost variance. The savings in fixed costs also does not off set the negative contribution variance.
c. Direct material flex budget variance = 50000 F + 90,000 UF = 40,000UF
Direct labor flex budget variance = Total flex variable cost budget variance -Direct material flex budget variance = 75000 - 40000UF = 35000 UF
QUESTION 1 (40 points) CC Corp estimated the following financial data, for the 2020 production budget:...
CC Corp estimated the following financial data, for the 2020 production budget: Sales of 122,000 units Sales price of $40 per unit Variable expenses of $9.90 per unit Fixed costs of $3,050,000 for the year At year end, actual sales data and costs were: Sales of 125,000 units Sales price of $38 per unit Variable expenses of $10.50 per unit Fixed costs of $3,000,000 for the year Create an Income Statement Performance Report, including favourable/unfavourable ratings for all Flex Budget...
CC Corp estimated the following financial data, for the 2020 production budget: Sales of 122,000 units Sales price of $40 per unit Variable expenses of $9.90 per unit Fixed costs of $3,050,000 for the year At year end, actual sales data and costs were: Sales of 125,000 units Sales price of $38 per unit Variable expenses of $10.50 per unit Fixed costs of $3,000,000 for the year Create an Income Statement Performance Report, including favourable/unfavourable ratings for all Flex Budget...
CC Corp estimated the following financial data, for the 2020 production budget: Sales of 122,000 units Sales price of $40 per unit Variable expenses of $9.90 per unit Fixed costs of $3,050,000 for the year At year end, actual sales data and costs were: Sales of 125,000 units Sales price of $38 per unit Variable expenses of $10.50 per unit Fixed costs of $3,000,000 for the year Create an Income Statement Performance Report, including favourable/unfavourable ratings for all Flex Budget...
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The follo points Sel 2 Thomas Co provides the following budget data for the year, based on 20.000 units: Static Budget 20.000 units S800,000 Units Sales ($40/unit) Variable Costs: 300.000 Direct Materials ($15/unit) Direct Labor (13/unit) 260.000 50,000 Variable Overhead ($2.50/unit) 30.000 Variable Operating Expenses ($1.s0/unit) 640,000 Total Variable Costs 160.000 Contribution Margin Fixed Costs Overhea 85,000 Operating Expenses 18.000 Total Fixed Costs 103.000 Income from Operations 57,000 Prepare a flexible budget performance report for the vear assuming actual sales...
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