Question

i Data Table - ces 7. TI data etual Performance Report Year Ended December 31, 2017 Flexible-Budget Flexible Variances Budget Actual Sales-Volume Static sult Variances 10 Results 105,000 Budget 90,000 67 Units sold Revenues (sales) $ S 44 672,000 440,000 324,000 162,000 Variable costs 23 Contribution margin 201 232,000 200,000 162,000 130,000 Fixed costs 3 $ Operating income 32,000 S 32,000 any

Answer 1

1
	Richfield company
	Flexible budget performance report
	For the month ended December 31, 2017
		Budget amount per unit	Actual Results	Flexible Budget Variance	Flexible Budget	Sales Volume Variance	Static Budget
	Units		105,000			105,000			90,000
	Sales Revenue	$         3.6	$ 672,000	$294,000	F	$     378,000	$ 54,000	F	$3,24,000
Less:	Variable Expenses	$         1.80	$ 4,40,000	$2,51,000	U	$     189,000	$ 27,000	U	$1,62,000
	Contribution margin		$ 232,000	$ 43000	F	$     189,000	$ 27,000	F	$1,62,000
Less:	Fixed Expenses		$ 200,000	$ 70,000	U	$ 130,000	$           -	None	$ 130,000
	Operating Income		$ 32,000	$ 27000	U	$ 59,000	$ 27,000	F	$ 32,000
2
			Actual Results	Static Budget
(i)	Units		1,05,000	90,000
(ii)	Sales Revenue		$ 6,72,000	$324,000
(ii) / (i)	Selling Price per unit		$         6.40	$        3.6
(iii)	Variable Expenses		$ 4,40,000	$1,62,000
(iii) / (i)	Variable cost per unit		$         4.19	$        1.80
3	As shown above, selling 15,000 more units than static budget i.e selling (90,000 + 15,000 = 105,000 units) , there is no change in operating income under static budget and Actual results whereas, on comparing Actual results with flexible budget there the operating income will decrease by $27,000.