Scott Sykes publishes a pilot training course curriculum kit that he sells to flight schools across the country. He prepared the following static budget for the year based on expected sales of 22,500 curriculum kits. Sales revenue $2,812,500 Variable cost of goods sold 1,125,000 Variable selling and administrative expenses 337,500 Contribution margin 1,350,000 Fixed manufacturing overhead 630,000 Fixed selling and administrative expenses 277,500 Operating income $442,500 At the end of the year, Scott had sold 23,250 curriculum kits at an average rate of $96 per hour. During the year, he incurred fixed overhead totaling $625,500.Calculate the fixed overhead spending variance. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Fixed overhead spending variance $ UnfavorableFavorableNot Applicable
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.
Scott Sykes publishes a pilot training course curriculum kit that he sells to flight schools across the country. He prepared the following static budget for the year based on expected sales of 22,500 curriculum kits.
| Sales revenue | $2,812,500 | |||
| Variable cost of goods sold | 1,125,000 | |||
| Variable selling and administrative expenses | 337,500 | |||
| Contribution margin | 1,350,000 | |||
| Fixed manufacturing |
630,000 | |||
| Fixed selling and administrative expenses | 277,500 | |||
| Operating income |
$442,500
|
At the end of the year, Scott had sold 23,250 curriculum kits at an average rate of $96 per hour. During the year, he incurred fixed overhead totaling $625,500.
Calculate the fixed overhead spending variance. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.)
| Fixed overhead spending variance | $
|
UnfavorableFavorableNot Applicable
|
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