Bank Assistant 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 2020 included these data: LOADING... (Click the icon to view the operating budget and actual results.) 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 Assistant 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. The budgeted amounts for September 2020 were: Number of checkbooks 20,000 Selling price per book $25 Variable cost per book $6 Fixed costs for the month $125,000 The actual results for September 2020 were as follows: Number of checkbooks produced and sold 16,900 Average selling price per book $27 Variable cost per book $5 Fixed costs for the month $131,000 .
Bank Assistant 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 2020 included these data: LOADING... (Click the icon to view the operating budget and actual results.) 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 Assistant 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. The budgeted amounts for September 2020 were: Number of checkbooks 20,000 Selling price per book $25 Variable cost per book $6 Fixed costs for the month $125,000 The actual results for September 2020 were as follows: Number of checkbooks produced and sold 16,900 Average selling price per book $27 Variable cost per book $5 Fixed costs for the month $131,000 .
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Bank Assistant
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
2020
included these data:LOADING...
(ClickThe 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 Assistant
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.The budgeted amounts for September
2020
were:|
Number of checkbooks
|
20,000
|
|---|---|
|
Selling price per book
|
$25
|
|
Variable cost per book
|
$6
|
|
Fixed costs for the month
|
$125,000
|
The actual results for September
2020
were as follows:|
Number of checkbooks produced and sold
|
16,900
|
|---|---|
|
Average selling price per book
|
$27
|
|
Variable cost per book
|
$5
|
|
Fixed costs for the month
|
$131,000
|
.
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Follow-up Question
Requirement 2. Prepare a flexible-budget-based variance analysis of the September performance.
Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label. Enter operating losses with a minus sign or parentheses.)
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Actual
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Results
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Units sold
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Revenues
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Variable costs
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Contribution margin
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Fixed costs
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Operating income (loss)
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