Question

6 of 9 (3 complete) 0 Requirements 1. How many pools did Water Land originally think it would install in April? 2. How many pools did Water Land actually install in April? 3. How many pools is the flexible budget based on? Why? 4. What was the budgeted sales price per pool? 5. What was the budgeted variable cost per pool? 6. Define the flexible budget variance. What causes it? 7. Define the volume variance. What causes it? 8. Fill in the missing numbers in the performance report. Print Done Clear All

Answer 1

1) The master budget indicates that Water Land planned to sell 4 pools in April.

2) The actual results indicate that Water Land actually installed 5 pools in April.

3) The flexible budget is always based on the actual results quantity and master budget price because the company wants to compare the same quantity with the different prices. So, the Water Land flexible budget is based on 5 pools

4) The budgeted sales price per pool= Sales revenue of Master budget/Sales volume of Master budget

= $90400/4= $22600 per pool

5) The budgeted variable cost per pool= Variable expenses of Master budget/Sales volume of Master budget

= $55200/4= $13800 per pool.

6) Flexible budget variance is the difference between the actual results and flexible budget. Both the actual results are flexible budget is based on the same level of quantity but different prices. In flexible budget the difference is because of the difference between the actual and planned price.

7) Volume variance is the difference between the flexible budget and master budget. The flexible budget and master budget are based on different quantity but same price. In volume variance the difference is because of actual and planned quantity.

8)

Water Land
Flexible Budget Performance Report: Sales and Operating Expenses
For the Year Ended April 30
	Actual	Flexible Budget Variance	Master Budget	Volume Variance	Master Budget
Sales volume (number of pools installed)	5	0 NONE	5	1 F	4
Sales revenue	$105000	(105000-113000)= 8000 U	$113000	(113000-90400)= 22600 F	$90400
Operating expenses:
Variable expense	$65000	(65000-69000)= 4000 F	$69000	(69000-55200)= 13800 U	$55200
Fixed expenses	25000	(25000-29300)= 4300 F	29300	0 NONE	29300
Total operating expenses	$90000	8300 F	$98300	13800 U	$84500