Flexible Budgets; Total Operating Income Variance; Breakdown of the Total Operating Income Variance; Spreadsheet Application The following information is available for Brownstone Products Company for the month of July: Actual Master Budget Units 3,800 4,000 Sales revenue $53,200 $60,000 Variable manufacturing costs 19,000 16,000 Fixed manufacturing costs 16,000 15,000 Variable selling and administrative expenses 7,700 8,000 Fixed selling and administrative expenses 10,000 9,000 Required What was the total operating income variance for July, rounded to the nearest whole dollar? (Note: This variance is also called the master (static) budget variance for the period.) Was this variance favorable (F) or unfavorable (U)? Set up a spreadsheet to compute the July sales volume variance and the flexible-budget variance for the month, both in terms of contribution margin and in terms of operating income. Round all dollar amounts to the nearest whole number. Configure your spreadsheet so that it will allow the firm to prepare pro-forma budgets for activities within its relevant range of operations. Use your spreadsheet to prepare a flexible budget for each of the following two output levels (round all dollar amounts in the flexible budgets to the nearest whole number): a. 3,750 units. b. 4,150 units.
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.
Flexible Budgets; Total Operating Income Variance; Breakdown of the Total Operating Income Variance; Spreadsheet Application The following information is available for Brownstone Products Company for the month of July:
|
|
|
Actual |
|
|
|
Units |
|
3,800 |
|
4,000 |
|
Sales revenue |
|
$53,200 |
|
$60,000 |
|
Variable |
|
19,000 |
|
16,000 |
|
Fixed manufacturing costs |
|
16,000 |
|
15,000 |
|
Variable selling and administrative expenses |
|
7,700 |
|
8,000 |
|
Fixed selling and administrative expenses |
|
10,000 |
|
9,000 |
Required
-
What was the total operating income variance for July, rounded to the nearest whole dollar? (Note: This variance is also called the master (static)
budget variance for the period.) Was this variance favorable (F) or unfavorable (U)? -
Set up a spreadsheet to compute the July sales volume variance and the flexible-budget variance for the month, both in terms of contribution margin and in terms of operating income. Round all dollar amounts to the nearest whole number.
-
Configure your spreadsheet so that it will allow the firm to prepare pro-forma budgets for activities within its relevant range of operations. Use your spreadsheet to prepare a flexible budget for each of the following two output levels (round all dollar amounts in the flexible budgets to the nearest whole number): a. 3,750 units. b. 4,150 units.
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