7.23 Elaboration and analysis of the flexible budget. Bank Management Printers produces luxury check books with three checks and stakes on the page. Each check card is customized and ordered through customer's bank. The operating budget of the company for September 2004 includes the following data. Number of checkbooks Selling price per checkbook 15.000 $20 $8 Variable cost per checkbook Monthly Fixed Costs $ 145.000 The actual results of September 2004 are presented as follows: Number of printed and sales checkbooks Average selling price per checkbook Variable cost per checkbook Monthly Fixed Costs 12.000 $ 21 $7 $150.000 The company's executive vice president noted that September's operating profit was much lower than expected, despite a higher-than- budgeted selling price and a lower-budgeted variable unit cost. You have been asked to explain the disappointing results in September. Bank Management Printers develops its flexible budget based on budgeted revenue per unit of product and variable budgeted costs per unit of product, without a detailed analysis of budgeted inputs. Request 1. Perform a Level 1 analysis of the September results. 2. Perform a Level 2 analysis of the September results. 3. Why might Bank Management Printers consider Level 2 analysis to be much more informative than Level 1 analysis? Explain the answer.
7.23 Elaboration and analysis of the flexible budget. Bank Management Printers produces luxury check books with three checks and stakes on the page. Each check card is customized and ordered through customer's bank. The operating budget of the company for September 2004 includes the following data. Number of checkbooks Selling price per checkbook 15.000 $20 $8 Variable cost per checkbook Monthly Fixed Costs $ 145.000 The actual results of September 2004 are presented as follows: Number of printed and sales checkbooks Average selling price per checkbook Variable cost per checkbook Monthly Fixed Costs 12.000 $ 21 $7 $150.000 The company's executive vice president noted that September's operating profit was much lower than expected, despite a higher-than- budgeted selling price and a lower-budgeted variable unit cost. You have been asked to explain the disappointing results in September. Bank Management Printers develops its flexible budget based on budgeted revenue per unit of product and variable budgeted costs per unit of product, without a detailed analysis of budgeted inputs. Request 1. Perform a Level 1 analysis of the September results. 2. Perform a Level 2 analysis of the September results. 3. Why might Bank Management Printers consider Level 2 analysis to be much more informative than Level 1 analysis? Explain the answer.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:7.23 Elaboration and analysis of the flexible budget. Bank Management Printers produces luxury check books with three checks and stakes on
the page. Each check card is customized and ordered through customer's bank. The operating budget of the company for September 2004
includes the following data.
Number of checkbooks
Selling price per checkbook
Variable cost per checkbook
Monthly Fixed Costs
15.000
$ 20
$8
$ 145.000
The actual results of September 2004 are presented as follows:
Number of printed and sales checkbooks
Average selling price per checkbook
Variable cost per checkbook
Monthly Fixed Costs
12.000
$ 21
$7
$ 150.000
The company's executive vice president noted that September's operating profit was much lower than expected, despite a higher-than-
budgeted selling price and a lower-budgeted variable unit cost. You have been asked to explain the disappointing results in September.
Bank Management Printers develops its flexible budget based on budgeted revenue per unit of product and variable budgeted costs per
unit of product, without a detailed analysis of budgeted inputs.
Request
1. Perform a Level 1 analysis of the September results.
2. Perform a Level 2 analysis of the September results.
3. Why might Bank Management Printers consider Level 2 analysis to be much more informative than Level 1 analysis? Explain the answer.
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