Question

Required information [The following information applies to the questions displayed below.] Brodrick Company expects to produce 20,700 units for the year ending December 31. A flexible budget for 20,700 units of production reflects sales of $455,400; variable costs of $62,100; and fixed costs of $142,000. Assume that actual sales for the year are $532,200 (26,100 units), actual variable costs for the year are $114,000, and actual fixed costs for the year are $134,000. Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) BRODRICK COMPANY Flexible Budget Performance Report For Year Ended December 31 Flexible Budget Actual Results Variances Favorable! Unfavorable Contribution margin

Answer 1

Ans.	BRODRICK COMPANY
	Flexible Budget Performance Report
	For the Year Ended December 31
		Flexible Budget	Actual Results	Variances	Favorable / Unfavorable
	Sales	$574,200	$532,200	$42,000	Unfavorable
	Variable cost	$78,300	$114,000	$35,700	Unfavorable
	Contribution margin	$495,900	$418,200	$77,700	Unfavorable
	Fixed costs	$142,000	$134,000	$8,000	Favorable
	Income from operations	$353,900	$284,200	$69,700	Unfavorable
	Flexible budget variance   =   Actual results - Flexible budget
	*Increase in revenue or net operating income and decrease in expenses from flexible budget to actual results =   Favorable.
	*Decrease in revenue or net operating income and increase in expenses from flexible budget to actual results =   Unfavorable.
	*Working Notes:
	*Selling price per unit = Sales / Sales units
	$455,400 / 20,700
	$22	per unit
	Total sales   =   Selling price per unit * Flexible budget units
		Flexible Budget At units
		20,700	26,100
	Total sales ($22 * units)	$455,400	$574,200
	Variable cost per unit = Variable cost / Predicted production
	$62,100 / 20,700
	$3.00	per unit
		Flexible Budget At units
		20,700	26,100
	Variable cost ($3 * units)	$62,100	$78,300
	*Total fixed cost and variable cost per unit always remains constant on each level of activity or units.
	*Calculations for flexible budget on actual level of activity.
		Flexible Budget		Flexible Budget At units
		Variable amount	Total fixed	20,700	26,100
		per unit	cost
	Sales	$22		$455,400	$574,200
	Variable cost	$3		$62,100	$78,300
	Contribution margin	$19		$393,300	$495,900
	Fixed costs		$142,000	$142,000	$142,000
	Income from operations			$251,300	$353,900