Question

Exercise 21-6 Preparing a flexible budget report LO P1 Lewis Co. reports the following results for May. Prepare a flexible budget report showing variances between budgeted and actual results. Actual $1,245,000 492,000 $ 132,000 1,500 Budgeted $ Sales Variable expenses Fixed expenses (total) Units produced and sold 800 per unit $ 320 per unit $140,000 1,300 List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance) Answer is complete but not entirely correct. LEWIS CO. Flexible Budget Performance Report For Month Ended May 31 Flexible Budget 1,040,000 1,245,000 416,000 Actual Results Fav/Unf. Variances Sales Variable expenses Favorable 205,000 492,000 76,000 Unlavorable 129,000 Favorable Contribution margin 624,000 140,000 753.000 132.000 8,000 Favorable Flxed expenses 137,000 Favorable 484,000 S 621,000s Income from operations Nekt 10 of 10 <Prev enter address Search & % 7 3 4 2 W K F D M B el G C

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Answer 1

Solution LEWIS CO Flexible Budget Performance Report For Month Ended May 31 Actual Flexible Variances Fav./Unf. Budget Results $45,000 Favorable $12,000 Unfavorable Sales $1,200,000 $480,000 $720,000 $140,000 $580,000 $1,245,000 $492,000 Variable expenses Contribution Margin $33,000 Favorable $8,000 Favorable $753,000 $132,000 $621,000 Fixed expenses Income from operations $41,000 Favorable WN-1: Flexible budget has been prepared as under Sales (1,500 units x $800) $1,200,000 $480,000 Variable expense (1,500 units x $320) Contribution Margin ($1,200,000-$480,000) $720,000 Fixed expenses Income from operations ($720,000 $140,000) $140,000 $580,000