Flexible Budgets and Operating-Income Variance Analysis; Spreadsheet Application The follo...

Flexible Budgets and Operating-Income Variance Analysis; Spreadsheet Application The following information is available for Brownstone Products Company for the month of July:

Required

1. Set up a spreadsheet to compute the July sales volume variance and the flexible-budget variance for the month in terms of both contribution margin and operating income.

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2. Discuss implications of these variances on strategic cost management for Brownstone.

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3. Configure your spreadsheet so that it will allow the firm to prepare pro forma budgets for activities within its relevant range of operations. Use your spreadsheet to prepare a flexible budget for each of the following two output levels:

a. 3,750 units.

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b. 4,150 units.

(CMA Adapted)