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As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the ye

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Answer #1

1. Actual operating income = Sales - Variable costs - Fixed costs

= $408,000 - $238,000 - $161,000

= $9,000

2. Master budget operating income = Sales - Variable costs - Fixed costs

= $456,000 - $276,000 - $141,000

= $39,000

3. (a) Mater budget variance = Actual operating income - Mater budget operating income

= $9,000 - $39,000

= $30,000

(b) Unfavorable

4. Master budget selling price per unit = $456,000 / 30,000 = $15.2

Master budget variable costs = $276,000 / 30,000 = $9.2

Flexible budget uses the actual units and selling price, costs from master budget

Flexible budget operating income = Sales - Variable costs - Fixed costs

= (25,000 * $15.2) - (25,000 * $9.2) - $141,000

= $9,000

(a) Flexible budget variance = Actual budget - Flexible budget

= $9,000 - $9,000

= None

(b) None

(c) Sales volume variance = Flexible budget - Static budget

= $9,000 - $39,000

= $30,000

(d) Unfavorable

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