Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December: Cicchetti Corporation Comparison of Actual Results to Planning Budget For the Month Ended December 31 Actual Results Planning Budget Variances Customers served 42,000 38,000 Revenue ($5.0q) $ 211,200 $ 190,000 $ 21,200 F Expenses: Wages and salaries ($37,900 + $1.8q) 117,400 106,300 11,100 U Supplies ($0.6q) 24,400 22,800 1,600 U Insurance ($14,900) 15,550 14,900 650 U Miscellaneous expense ($7,900 + $0.5q) 31,050 26,900 4,150 U Total expense 188,400 170,900 17,500 U Net operating income $ 22,800 $ 19,100 $ 3,700 F Required: Prepare the company's flexible budget performance report for December. Select each variance as favorable (F), unfavorable (U) or "None".
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.
Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December:
| Cicchetti Corporation Comparison of Actual Results to Planning Budget For the Month Ended December 31 |
|||||||||||
| Actual Results | Planning |
Variances | |||||||||
| Customers served | 42,000 | 38,000 | |||||||||
| Revenue ($5.0q) | $ | 211,200 | $ | 190,000 | $ | 21,200 | F | ||||
| Expenses: | |||||||||||
| Wages and salaries ($37,900 + $1.8q) | 117,400 | 106,300 | 11,100 | U | |||||||
| Supplies ($0.6q) | 24,400 | 22,800 | 1,600 | U | |||||||
| Insurance ($14,900) | 15,550 | 14,900 | 650 | U | |||||||
| Miscellaneous expense ($7,900 + $0.5q) | 31,050 | 26,900 | 4,150 | U | |||||||
| Total expense | 188,400 | 170,900 | 17,500 | U | |||||||
| Net operating income | $ | 22,800 | $ | 19,100 | $ | 3,700 | F | ||||
Required:
Prepare the company's flexible budget performance report for December. Select each variance as favorable (F), unfavorable (U) or "None".
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