Dubai Manufacturing produces ceiling fans.A master budget was prepared by the controller based on sales of 19,500 fans for the month of May. The budgeted income statement for the period is as follows $3,120,000 Variable expenses Direct material Direct labor $877,500 390,000 Tota be overh Total variable 325,000 ,267,500 Fixed overhead Fixed selling and Total fixed expenses Operating income 975.000 $292.500 During May, Dubai produced and sold 23,400 fans and had the following actual results $3,731,000 Variable expenses Direct materials Direct labor Variable overhead Total variable 1,037,400 487,500 expenses 1,491,100 351,000 Fixed overhead Fixed selling and Total fixed expenses Operating income 1.001.000 5490100 Required a. Prepare a flexible budget for May b. Prepare a performance report for management containing i. Sales Volume Variance i. Flexible Budget Variance
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Dubai Manufacturing produces ceiling fans.A
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