RTI Company's master budget calls for production and sale of 18,900 units for $98,280, variable costs of $43,470, and fixed costs of $18,400. During the most recent period, the company incurred $32,900 of variable costs to produce and sell 18,400 units for $85,900. During this same period, the company earned $25,900 of operating income. Required: 1. Determine the following for RTI Company: (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) a. Flexible budget operating income. b. Flexible budget variance, in terms of contribution margin. Was this variance favorable or unfavorable? c. Flexible budget variance, in terms of operating income. Was this variance favorable or unfavorable? d. Sales volume variance, in terms of contribution margin. Was this variance favorable or unfavorable? e. Sales volume variance, in terms of operating income. Was this variance favorable or unfavorable? a. Flexible budget operating income b. Flexible budget variance (contribution margin) c. Flexible budget variance (operating income) d. Sales volume variance (contribution margin) Sales volume variance (operating income) e Unfavorable Unfavorable Unfavorable Unfavorable

RTI Company's master budget calls for production and sale of 18,900 units for $98,280, variable costs of $43,470, and fixed costs of $18,400. During the most recent period, the company incurred $32,900 of variable costs to produce and sell 18,400 units for $85,900. During this same period, the company earned $25,900 of operating income. Required: 1. Determine the following for RTI Company: (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) a. Flexible budget operating income. b. Flexible budget variance, in terms of contribution margin. Was this variance favorable or unfavorable? c. Flexible budget variance, in terms of operating income. Was this variance favorable or unfavorable? d. Sales volume variance, in terms of contribution margin. Was this variance favorable or unfavorable? e. Sales volume variance, in terms of operating income. Was this variance favorable or unfavorable? a. Flexible budget operating income b. Flexible budget variance (contribution margin) c. Flexible budget variance (operating income) d. Sales volume variance (contribution margin) Sales volume variance (operating income) e Unfavorable Unfavorable Unfavorable Unfavorable

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

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.

Question

RTI Company's master budget calls for production and sale of 18,900 units for $98,280, variable costs of $43,470, and fixed costs of
$18,400. During the most recent period, the company incurred $32,900 of variable costs to produce and sell 18,400 units for $85,900.
During this same period, the company earned $25,900 of operating income.
Required:
1. Determine the following for RTI Company: (Do not round intermediate calculations. Round your answers to the nearest whole
dollar.)
a. Flexible budget operating income.
b. Flexible budget variance, in terms of contribution margin. Was this variance favorable or unfavorable?
c. Flexible budget variance, in terms of operating income. Was this variance favorable or unfavorable?
d. Sales volume variance, in terms of contribution margin. Was this variance favorable or unfavorable?
e. Sales volume variance, in terms of operating income. Was this variance favorable or unfavorable?
a. Flexible budget operating income
b. Flexible budget variance (contribution margin)
c Flexible budget variance (operating income)
d. Sales volume variance (contribution margin)
e Sales volume variance (operating income)
Unfavorable
Unfavorable
Unfavorable
Unfavorable

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Step 1: Explanation of variance analysis

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Step 2: Requirement a. Flexible budget operating income

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Step 3: Requirement b. Flexible budget variance, in terms of contribution margin

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Step 4: Requirement c. Flexible-budget variance, in terms of operating income

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Step 5: Requirement d. Sales volume variance, in terms of contribution margin

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Step 6: Requirement e. Sales volume variance, in terms of operating income

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