Question

3 Problem 1143 (#1 and 2 only) Flexible Budgeting: Variances; Impact on Behavior 4 DATA INPUT Lawnmate Company Operating Results For the Month of May 6 8 9 10 Units sold Actual Master Budget 5,000 Variance 4,800 200 U $ 1,200,000 760,000 S 440,000 180,000 120,000 S 140,000 $ 1,152,000 780,000 S 372,000 180,000 115,000 S 77,000 $ 48,000 U 20,000) U $ 68,000 U 12 Revenue 13 Variable cost 14 Contribution margin 15 Fixed overhead 16 Fixed general and adminstrative cost 17 Operating income 18 19 Unit costs: 20 Direct material 21 Direct labor 22 Variable production overhead 23 Variable selling expenses 24 25 Total variable costs: 26 Direct material 27 Direct labor 28 Variable production overhead 29 Variable selling expenes 5,000 F $ 63,000 U 60 36 12 $ 780,000 S 320,000 S 192,000 $ 176,000 S 92,000

Answer 1

Lawnmate Comapan Flexible Budget For the Month of May Revenue 4,800 S 1,200,000 5,000 $ 1,152,000 Deduct: Variable Costs: Direct Material Direct Labor Variable Production Overhead Variable Selling Expenses 4,800 4,800 4,800 4,800 $ 288,000 S 211,200 S 172,800 S 57,600 60 36 12 Total Variable Costs 729,600 Contribution Margin 422,400 Deduct: Fixed Costs: $ 180,000 $ 120,000 Fixed Production Overhead Fixed general and administrative cost 300,000 Operating Income S 122,400

Lawnmate Comapany Flexible Budget Variances For the Month of Ma Flexible Budget Flexible- Budget vanance Actual Units 4,800 4,800 1,152,000 $ 1,152,000 Revenue Variable Costs: U or F Direct Material Direct Labor Variable Production Overhead Variable Selling Expenses $ 320,000 192,000 $176,000 $ 92,000 $780,000 $ 372,000 $288,000 $211,200 $172,800 S57,600 $729,600 $422,400 $32,000 $19,200 3,200 $34,400 $50,400 $50,400 Total Variable Costs Contribution Margin Fixed Costs: U or $180,000 $115,000 $295,000 $ 180,000 $120,000 Fixed Production Overhead Fixed general and administrative cost 5,000 5,000 $45,400 Total Fixed Costs Operating Income $122,400