Question

The follo points Sel 2 Thomas Co provides the following budget data for the year, based on 20.000 units: Static Budget 20.000 units S800,000 Units Sales ($40/unit) Variable Costs: 300.000 Direct Materials ($15/unit) Direct Labor (13/unit) 260.000 50,000 Variable Overhead ($2.50/unit) 30.000 Variable Operating Expenses ($1.s0/unit) 640,000 Total Variable Costs 160.000 Contribution Margin Fixed Costs Overhea 85,000 Operating Expenses 18.000 Total Fixed Costs 103.000 Income from Operations 57,000 Prepare a flexible budget performance report for the vear assuming actual sales were 22,000 units. Variances must include the dollar amount as well as identification of whether favorable or unfavorable. 30 points) Flexible Budget $ Variance (F/U) Actual 22,000 units 22,000 units S $ 651,000 S ariable Costs Materials 231,000 abor 168,000 Overhead 73,500 Operating Expenses 39,500 able Costs en Margin 512.000 osts: 139,000 77,500 enses 12,000 ts perations 89,500 49.500

Answer 1

2. Thomas Co.

	Flexible Budget		Actual		$ Variance (F/U)
Units	22,000 units		22,000 units
Sales (22000 x $40)		880000		651000	229000	U
Variable Costs:
Direct materials (22000 x $15)	330000		231000		99000	F
Direct labor (22000 x $13)	286000		168000		118000	F
Variable overhead (22000 x $2.50)	55000		73500		18500	U
Variable operating expenses (22000 x $1.50)	33000		39500		6500	U
Total variable costs		704000		512000	192000	F
Contribution margin		176000		139000	37000	U
Fixed Costs:
Overhead	85000		77500		7500	F
Operating expenses	18000		12000		6000	F
Total fixed costs		103000		89500	13500	F
Income from operations		73000		49500	23500	U

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