Question

Bach Table Company manufactures tables for schools. The current year operating budget is based on sales of 40,000 units at $50 per table. Operating income is anticipated to be $300,000. Budgeted variable costs are $30 per unit, while fixed costs total $500,000 Actual income for the year was a surprising $2,268,000 on actual sales of 42,000 units Actual variable costs were $33 per unit and fixed costs totaled $550,000 Required: Prepare a Level 2 variance analysis report with both flexible-budget and sales volume variances

Answer 1

Bach Table company variance Analysis Static sales Flexible Flexible ACtual Budget Budget VOIvavione Varignce Result Onit 40000 42000 42000 4204000 2,104,000 2 LO0,000 100000 2,000,000 L386,000) 126000 U1260000) 60000 U1200000) L978000 F84o,000 40,000 SO0D0 500000) sales Nari Psts Contribution magin 2,818000 fixed cost Opeactingncome s 2,268,000 1928000 F 340,000 40000 F 800,000 (500000) F300000 (550, 000) (UACtual Result Vvariatle cost 42000 X $ 33 13.86000 6) conta tion main ixed cost OP InCOme 2, 268,000 S 50000 Ss0000 cm- s 2268 000 t 28,18,00O (9 sale vanoble Cost sales- 1386000 . 2,818,000 sale 2 S18000 t / 386 000 F4204,000 2) Frexible Budget Csale 42000 X $ SO 2,100000 (R vaniable cost 42000 X 30 1260,000 37

) static Bud get: 2,000 00O 1 200,000 asale ( vanable :40000 XS 40000 X $30 F 1928,000 F (U TOTG Flexible Budget varian Ce 40,600 F TOTCI sale -volume va ian ca