Question

The Lively Balloon Company produces party balloons that are sold in multi-pack cases. To follow is the company's performance report in contribution margin format for August: (Click the icon to view the performance report in contribution margin format.) 0 Requirements Read the requirements. i Data Table - X Requirement 1. What is the budgeted sal The budgeted sales price per unit is $ U The Lively Balloon Company Actual vs. Budget Performance Report For the Month Ended August 31 Master Master Budget Budget Variance Actual 1. What is the budgeted sales price per unit? 2. What is the budgeted variable expense per unit? 3. What is the budgeted fixed cost for the period? 4. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) 5. Management would like to determine the portion of the master budget variance that is (a) due to volume being different than originally anticipated, and (b) due to some other unexpected cause. Prepare a flexible budget performance report to address these questions, using the actual sales volume of 53,500 units and the budgeted sales volume of 51,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 46,000 to 63,500 units. 6. Using the flexible budget performance report you prepared for Requirement 5, answer the following questions: a. How much of the master budget variance (calculated in Requirement 4) for operating income is due to volume being higher than expected? b. How much of the master budget variance for variable expenses is due to some cause other than volume? c. What could account for the flexible budget variance for sales revenue? d. What is the volume variance for fixed expenses? Why is it this amount? 53,500 Sales volume (number of cases sold) Sales revenue 51,000 S Less: Variable expenses Contribution margin S 186,300 $ 75,800 110,500 $ 72,700 37,800 $ 168,300 66,300 102,000 71,000 31,000 Less: Fixed expenses S Operating income Print Done Print Done Enter any number in the edit fields and then click Check Answer.

Answer 1

1 Budgeted sale price per unit: - - Budgeted sales Revenue Dudgeted sales volume = $168300 51,ooounts - $3.3 per unit O Budgeted variable expense por unit & Budgeted variable Expenses Budgeted production volume - $66,300 51,ooounts - $1.3 per unit No. of units produced a roof wits seld.

6 cost in the August month Budgeted fixed $71.000 master Budged variance: Particulars Remarks I Actual Master Master - Budges Budget Vorance 6aso stooo-14 sales volume Isales volume 53,500 51000 units units 2,500Cf) units since Actual sales more than.. audgeted sales Revenue $ 186,300 $1,68,300 $ 18,000 CF) $7,000 $66,300 $9.500 (u) c) variable Expenses unfavourable bez budgeted cost is message than Actual Cast $110,000 & 102coo/ $8,500 (F) Contribution margin to Fixed Cost $72,000 $11,000 & 1700 (u) unfrownhle since Actual cast is more than Budgeted operating Income $21,800 $ 31,000 & 6800lf.