Before the year began, the following static budget was developed for the estimated sales of 100,000. Sales are sluggish and management needs to revise its budget. Use this information to prepare a flexible bu for 80,000 and 90,000 units of sales. Sales Cost of Goods Sold Flexible Budget 100,000 $3,370,000 $ Direct Material Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Cost of Goods Sold Gross Profit Variable Sales and Administrative Expenses Fixed Sales and Administrative Expenses Income Before Taxes Taxes Net Income/Loss $900,000 $ 900,000 230,000 70,000 $2,100,000 $1,270,000 100,000 960,000 $210,000 63,000 $147,000 80,000 2,696,000 720,000 720,000 ✔ 184,000 ✔ 70,000 1,694,000 ✓ 1,002,000 ✓ 80,000 ✓ 960,000 ✓ 38,000 ✓ $ 90,000 3,033,000 810,000 810,000 207,000 70,000 1,897,000 1,136,000 90,000 960,000 86,000 25,800 60,200

Before the year began, the following static budget was developed for the estimated sales of 100,000. Sales are sluggish and management needs to revise its budget. Use this information to prepare a flexible bu for 80,000 and 90,000 units of sales. Sales Cost of Goods Sold Flexible Budget 100,000 $3,370,000 $ Direct Material Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Cost of Goods Sold Gross Profit Variable Sales and Administrative Expenses Fixed Sales and Administrative Expenses Income Before Taxes Taxes Net Income/Loss $900,000 $ 900,000 230,000 70,000 $2,100,000 $1,270,000 100,000 960,000 $210,000 63,000 $147,000 80,000 2,696,000 720,000 720,000 ✔ 184,000 ✔ 70,000 1,694,000 ✓ 1,002,000 ✓ 80,000 ✓ 960,000 ✓ 38,000 ✓ $ 90,000 3,033,000 810,000 810,000 207,000 70,000 1,897,000 1,136,000 90,000 960,000 86,000 25,800 60,200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Summer Company's static budget is based on a planned activity level of 25,000 units. At the same time the static budget was prepared, the management accountant prepared two additional budgets, one based on 20,000 units and one based on 30,000. The company actually produced and sold 29,000 units. In evaluating its performance, management should compare the company's actual revenues and costs to which of the following budgets? A) A budget based on 29,000 unitsB) A budget based on 25,000 unitsC) A budget based on 30,000 unitsD) A budget based on 20,000 units
e. Production, Sales, Income Statement Clear my choice Which of the following statements is false? Select one: Oa. The budgeted variable selling and administrative expense is calculated by multiplying the budgeted unit sales by the variable selling and administrative expense per unit. Ob. The master budget consists of a number of separate but interdependent budgets. Oc.A continuous or perpetual budget is a 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed. O d. The direct labor budget begins with the required production in units from the production budget. Oe. Control involves developing goals and preparing various budgets to achieve those goals. Next page Tables- Jump to.. e to seardh
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Before the year began, the following static budget was developed for the estimated sales of 100,000. Sales are sluggish and management needs to revise its budget. Use this information to prepare a flexible budget for 80,000 and 90,000 units of sales. Flexible Budget 100,000 80,000 90,000 Sales $3,570,000 $ Cost of Goods Sold Direct Material $900,000 $ $ Direct Labor 1,100,000 Variable Manufacturing Overhead 240,000 Fixed Manufacturing Overhead 70,000 Cost of Goods Sold $2,310,000 $ $4 Gross Profit $1,260,000 $4 Variable Sales and Administrative Expenses 100,000 Fixed Sales and Administrative Expenses 940,000 Income Before Taxes $220,000 Taxes 66,000 Net Income/Lss $154,000 $
Robinson Company has two products, A and B. Robinson's budget for August follows: Master Budget Sales Variable cost Contribution margin Fixed cost Operating income Selling price Sales Variable cost Contribution margin Fixed cost On September 1, these operating results for August were reported: Operating Results Operating income Units sold Product A $ 330,000 180,000 $ 150,000 120,000 $ 30,000 $ 110 a. Flexible-budget variance b. Sales volume variance c. Sales quantity variance d. Sales mix variance Product B $ 450,000 270,000 $ 180,000 90,000 $ 90,000 $ 50 Product A $ 112,500 68,750 $ 43,750 120,000 $ (76,250) 1,250 Required: 1. For each product, determine the following variances measured in dollars of contribution margin: Product B $ 585,000 393,750 $ 191,250 90,000 $ 101,250 11,250 Product A Product B
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The following information was drawn from the accounting records of Ashton Company. Budgeted Actual Sales $ 10,000 $ 13,000 Cost of Goods Sold (5,000 ) (6,600 ) Gross Margin 5,000 6,400 Variable Cost (2,000 ) (2,700 ) Fixed Cost (2,500 ) (1,900 ) Net Income $ 500 $ 1,800 Based on this information Ashton Company has a Multiple Choice $1,300 favorable sales variance $1,300 unfavorable sales variance $3,000 favorable sales variance $3,000 unfavorable sales variance
Amanda Manufacturing Company prepared the following static budget income statement: Revenues $ 172,250 Variable Costs (107,250 ) Contribution Margin 65,000 Fixed Costs (36,000 ) Net Income $ 29,000 The budgeted costs were based on a planned sales volume of 6,500 units. Actual production was 6,300 units.The amount of net income based on a flexible budget of 6,300 units would have been Multiple Choice $20,700. $22,700. $27,000. $71,250.
Matthew works in the accounting department of a local footwear manufacturer that specializes in clogs and boots. Clogs and boots typically sell for $97 and $192 per pair, respectively. Based on past experience, fashion trends, and seasonal shifts, the company expected to sell 760 pairs of clogs and 240 pairs of boots. The variable cost per pair was $52 for clogs and $78 for boots. At the end of the year, Matthew evaluated the company's sales and contribution margin amounts against the budget. Actual results for the year were as follows. . . . (a) Actual sales volume: clogs, 869; boots, 231. Actual selling price: clogs, $108 per pair; boots, $181 per pair. Actual per-unit variable costs for each product were the same as budgeted. Your answer is correct.
The following information was drawn from the accounting records of Ashton Company. Budgeted Actual Sales $ 9,000 $ 11,600 Cost of Goods Sold (4,600 ) (6,000 ) Gross Margin 4,400 5,600 Variable Cost (1,800 ) (2,400 ) Fixed Cost (2,100 ) (1,600 ) Net Income $ 500 $ 1,600 Based on this information Ashton Company has a Multiple Choice $1,100 favorable sales variance $1,100 unfavorable sales variance $2,600 favorable sales variance $2,600 unfavorable sales variance