Question

Bank Organizer ​Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the​ customer's bank. The​company's operating budget for September 2017 included these​ data:

The budgeted amounts for September 2017 ​were:

Number of checkbooks	13,000
Selling price per book	$22
Variable cost per book	$8
Fixed costs for the month	$140,000

The actual results for September 2017 were as​ follows:

Number of checkbooks produced and sold	10,800
Average selling price per book	$23
Variable cost per book	$7
Fixed costs for the month	$144,800

1.	Prepare a​ static-budget-based variance analysis of the September performance. Begin with the actual​ results, then compute the static budget and the​ static-budget variances. Label each variance as favorable or unfavorable.​ (Enter an operating loss with a minus sign or​ parentheses.)
2.	Prepare a​ flexible-budget-based variance analysis of the September performance.
3.	Why might Bank Organizer find the​ flexible-budget-based variance analysis more informative than the​ static-budget-based variance​ analysis? Explain your answer.

The executive vice president of the company observed that the operating income for September was much lower than​ anticipated, despite a​ higher-than-budgeted selling price and a​ lower-than-budgeted variable cost per unit. As the​ company's management​ accountant, you have been asked to provide explanations for the disappointing September results. Bank Organizer develops its flexible budget on the basis of budgeted​ per-output-unit revenue and​ per-output-unit variable costs without detailed analysis of budgeted inputs.

Answer 1

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Part 1 and 2		Actual		Spending and Revenue Variance		Flexi ble		Spending and Revenue Variance		Static Budget
		Per unit	Total	$	Variance	Per unit	Total	$	Variance	Per unit	Total
No of Check Books		10,800				10,800				13,000
Sale		$         23	$248,400	$            10,800	F	$         22	$237,600	$            48,400	U	$         22	$286,000
Variable Cost		$           7	$ 75,600	$            10,800	F	$           8	$ 86,400	$            17,600	F	$           8	$104,000
Fixed Cost			$144,800	$              4,800	U		$140,000	$                    -	None		$140,000
Net Income			$ 28,000	$            16,800	F		$ 11,200	$            30,800	U		$ 42,000
Part 3
Flexible budget give more detailed analysis.
It gives variance due to volume and also due to spending and revenue change per unit