eleTube Inc. manufacturers TVs. Unfortunately, some of the company's data was misplaced by an IT error. Use the following information to replace the lost data:
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.
Question 2.1
TeleTube Inc. manufacturers TVs. Unfortunately, some of the company's data was misplaced by an IT error. Use the following information to replace the lost data:
|
Analysis |
Actual Results |
Flexible Variances |
Flexible Budget |
Sales- Volume Variances |
Static Budget |
|
Units Sold |
112,500 |
|
112,500 |
|
103,125 |
|
Revenues |
$42,080 |
$1,000 F |
(A) |
$1,400 U |
(B) |
|
Variable Costs |
(C) |
$200 U |
$15,860 |
$2,340 F |
$18,200 |
|
Fixed Costs |
$8,280 |
$860 F |
$9,140 |
|
$9,140 |
|
Operating Income |
$17,740 |
(D) |
$16,080 |
(E) |
$15,140 |
Required
- What are the respective flexible-budget revenues (A)?
- What are the static-budget revenues (B)?
- What are the actual variable costs (C)
- What is the total flexible-
budget variance (D)? - What is the total sales-volume variance (E)?
- What is the total static-budget variance?
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