Question

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Lewis Co. reports the following results for May. Prepare a flexible budget report showing variances between budgeted and actual results. Sales Variable expenses Fixed expenses (total) Units produced and sold Budgeted $ 350 per unit $ 140 per unit $126,500 1,210 Actual $510,000 $ 204,000 $123,000 1,410 List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance) Answer is not complete. LEWIS CO. Flexible Budget Performance Report Variances Fav./Unf. For Month Ended May 31 Flexible Actual Budget Results $ 510,000 204,000 Sales Variable expenses Contribution margin Fixed expenses Income from operations Favorable Unfavorable Favorable Favorable Favorable 123,000

Answer 1

	Flexible budget	Actual results	Variances	Fav./Unf.
Sales	493500	510000	16500	Favorable
Variable expenses	197400	204000	6600	Unfavorable
Contribution margin	296100	306000	9900	Favorable
Fixed expenses	126500	123000	3500	Favorable
Income from Operations	169600	183000	13400	Favorable
Workings:
	Flexible budget
Sales	493500	=1410*350
Variable expenses	197400	=1410*140
Contribution margin = Sales-Variable expenses
Income from Operations = Contribution margin-Fixed expenses