Question

The Outrageous Balloon Company produces party balloons that are sold in multi-pack cases. To follow is the company's performance report in contribution margin format for July:

Data Table X 0 Requirements The Outrageous Balloon Company Actual vs Budget Performance Report For the Month Ended July 31 Master Budget Master Budget Variance Actual Sales volume number of cases sold) Sales revendo Less: Variable expenses Contribution margin 62,600 $ 218,700 $ 84.300 60,000 104,700 70.800 1. What is the budgeted sales price per unit? 2. What is the budgeted variable expense per unit? 3. What is the budgeted foxed cost for the period? 4. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U) 5. Management would lke to determine the portion of the master budget variance that is (a) dun to volume being different than originaly anticipated, and (b) due to some other unexpected cause Prepare a flexible budget performance report to address these questions, using the actual sales volume of 62,500 units and the budgeted sales volume of 59,000 units. Use the original budget assumptions for sales price variable cost per unit and food costs, assuming the relevant range stretches from 54,000 to 72,500 units 6. Using the exible budget performance report you prepared for Requirements, answer the following questions a. How much of the master budget variance calculated in Requirement 4 for operating income is due to volume being higher than expected? b. How much of the master budget vanance for vanable expenses d o some cause other than volume? c. What could account for the flexible budget variance for sales revenue? d What is the volume variance for food expenses? Why is this amount? $ Less Fored expenses 134.400 $ 66,500 67,000 $ 123,900 65.000 58,000 Operating income $ Print Done Print Done Clear All Check Answer

Answer 1

If actual revenue is higher than budgeted, it is Favourable and if actual expenses are higher than budgeted, it is Unfavourable.