Question

The Edinburg Company produces engine parts for car manufacturers. A new accountant intern at Edinburg has accidentally deleted the calculations on the company's variance analysis calculations for the year ended December 31, 2017. The following table is what remains of the data. (Click the icon to view the data.) Read the requirements. Requirement 1. Calculate all the required variances. (If your work is accurate, you will find that the total static-budget variance is $0.) Begin with the flexible budget columns, then the sales volume variance column. Label each variance as favorable (F) or unfavorable (U). (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label. Round your answers to the nearest whole dollar.) Actual Flexible-Budget Flexible Results Variance Budget Units sold 110,000 Revenues (sales) $ 687,500 450,000 Variable costs Contribution margin Fixed costs 237,500 172,000 65,500 Operating income

Answer 1

1.

Performance report
Year Ended 31st Dec, 2017
	Actual Results	Static Budget	Flexible Budget	Flexible Budget Varinaces		Sales Volume Variance
	1	2	3	4=1-3		5=3-2
Units Sold	$    110,000.00	$                               97,000.00	$           110,000.00	$                                               -	0	$                         13,000.00	F
Revenue(Sales)	$    687,500.00	$                             349,200.00	$           396,000.00	$                             291,500.00	F	$                         46,800.00	F
variable Cost	$    450,000.00	$                             203,700.00	$           231,000.00	$                             219,000.00	U	$                         27,300.00	U
Contribution margin	$    237,500.00	$                             145,500.00	$           165,000.00	$                               72,500.00	F	$                         19,500.00	F
Fixed Cost	$    172,000.00	$                               80,000.00	$             80,000.00	$                               92,000.00	U	$                                        -	0
Operating Income	$      65,500.00	$                               65,500.00	$             85,000.00	$                             (19,500.00)	U	$                         19,500.00	F
Working Notes:-
1. Calculation of Budgeted Sales price
349200/9700	$                 3.60
2. Budgeted Variable Cost per Unit
203700/97000	2.1

2.

Actual Selling Price
687500/110000	$                 6.25
Budgeted Selling Price
349200/9700	$                 3.60
Actual Variable Cost per unit
450000/110000	$                 4.09
Budgeted variable cost per unit
203700/97000	$                 2.10

3.Here management tried to earn more profit by increasing selling price of Product & that is why variable cost increased gradually