Question

James Manufacturing has the following information available for July Flexible Budget Variance Flexible Budget Sales Activity Variance 3,0000 Master Budget $16,800F Actual Results Units 12,000 Sales revenue Less: Variable manufacturing costs $88,500 Variable marketing and administrative Contribution margin $52,000 $92,000 $ 5,5000 ? $6,200F $6,3000 $111,000 $ 33,000 ? What was James's flexible budget sales revenue for July? Multiple Choice $156.000 O O $195.000 O $172.800 o

Answer 1

Ans.	Option 1st $156,000
	Explanations and Calculations:
	Step 1 : Calculation of flexible budgeted variable marketing and administrative costs:
	Sales activity variance for this cost is $6,200 F, it means that the flexible
	budgeted cost is $6,200 less than master budget.
	Flexible budget cost = Master budget cost - Sales activity variance
	$33,000 - $6,200 = $26,800
	Step 2 : Calculation of actual variable marketing and administrative costs:
	Flexible budget variance for this cost is $5,500 U, it means that the actual cost
	is $5,500 greater than the flexible budget.
	Actual cost = Flexible budget cost + Flexible budget variance
	$26,800 + $5,500    =     $32,300
	Step 3 : Calculation of actual sales revenue :
	Actual sales revenue = Variable manufacturing cost + Variable marketing & administrative + Contribution margin
	$88,500 + $32,300 + $52,000
	$172,800
	Step 4 : Calculation of Flexible budget sales revenue :
	Flexible budget variance for sales revenue is $16,800 F, it means that the actual sales revenue
	is $16,800 greater than the flexible budget.
	Flexible budget sales revenue = Actual sales revenue - Flexible budget variance
	$172,800 - $16,800
	$156,000