Flexible Budgets, Direct-Cost Variances, and Management ControlQuestion 2a. Using an example, explain the concept of a flexible budget, flexible budgetvariances and sales volume variances.2b. Hasan Table Company manufactures tables for schools. The 2018 operatingbudget is based on sales of 45,000 units at 55 Taka per table. Operating incomeis anticipated to be 240,000 Taka. Budgeted variable costs are 35 Taka per unit,while fixed costs total 660,000 Taka.Actual income for 2018 was a surprising 569,000 Taka on actual sales of 46,000units at 60 Taka each. Actual variable costs were 34 Taka per unit and fixedcosts totaled 627,000 Taka.Required:Prepare a variance analysis report with both flexible-budget and sales-volumevariances.

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Business

Accounting

Required: Prepare a variance analysis report with both flexible-budget and sales-volume variances.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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