Question

Surf Side Flexible Budget Performance Report: Sales and Operating Expenses For the Year Ended April 30 Actual Flexible Budget V ariance ? Flexible Budget ? Master Budget Volume Variance ? Sales volume (number of pools installed) 5 $ 104,000 ? $ 109,000 $ 87,200 Sales revenue Operating expenses: Variable expenses $ 60,000 20,000 65,000 23,600 52,000 23,600 Fixed expenses Total operating expenses

Answer 1

1. The master budget indicates that surf side planned to sell 4 pools in April.

2. The actual budget indicates that surf side actually installed 5 pools.

3. Flexible budget is based on 5 pools as flexible budget is calculated based on actual output.

4. Budgeted sale price per pool is $21,800 ($87,200/4).

5. Budgeted variable cost per pool is $13,000 (52,000/4).

6. Flexible budget variance is the difference between actual results and flexible budget. it is caused when actual results are not as per planned or budgeted.

7. Volume variance is the difference between Flexible budget and Master budget. It is caused when actual outputs are more than budgeted .

8.

Surf Side Flexible Budget Performance Report: Sales and Operating Expenses For The Year Ended April 30
	Actual	Flexible budget variance		Flexible budget	Volume variance		Master budget
Sales volume (number of pools installed)	5	0		5	1	F	4
Sales revenue	$104,000	$5,000	U	$109,000	$21,800	F	$87,200
Operating expenses:
Variable expenses	60,000	5,000	F	65,000	13,000	U	52,000
Fixed expenses	20,000	3,600	F	23,600	0		23,600
Total operating expenses	80,000	8,600	F	88,600	13,000	U	75,600