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. Discuss implications of these variances on strategic cost management for Brownstone. 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): 3,750 units. 4,150 units. (CMA Adapted)
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.
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.
-
Discuss implications of these variances on strategic cost management for Brownstone.
-
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):
-
3,750 units.
-
4,150 units.
(CMA Adapted)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
