Question

Bay City Company’s fixed budget performance report for July follows. The $513,000 budgeted total expenses include $350,000 variable expenses and $163,000 fixed expenses. Actual expenses include $153,000 fixed expenses.

	Fixed Budget			Actual Results			Variances
Sales (in units)		7,000			5,900
Sales (in dollars)	$	560,000		$	525,100		$	34,900	U
Total expenses		513,000			473,000			40,000	F
Income from operations	$	47,000		$	52,100		$	5,100	U

Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately.

(please help me with HOW to get to the solution, with the Math. Thank you)

Answer 1

Flexible Budget Cmputation is shown below (all $ values):

Actual Variable Expense= Total Actual expense (473000)-Actual Fixed (153000)

Variance Fixed=Actual Budget Fixed-Actual Fixed

Variance Variable Expense=Budgeted Variable Expense-Actual Variable Expense

Budgeted Variable expense as percentage of sales=350000/560000

Actual Variable expense as percentage of actual sales=320000/525100

	Budget	Actual	Fixed	Variable
	Fixed	Variable	Actual Fixed	Actual Variable	Variance
sales (in units)	7000		5900		1100
sales (in $)	560000		525100		34900
Total Expense (in $)	163000	350000	153000	320000	10000	30000
Income from Operations (in $)	47000		52100		-5100
Budgeted Variable expense as percentage of sales	63%
Actual Variable expense as percentage of actual sales	61%