The following information is available for Brownstone Products Company for the month of July: Master Actual Budget 3,700 4,000 $ 54,500 $ 60,000 11 10,600 16,000 12,500 13,200 7,100 8,000 10,400 10, 150 Units Sales revenue Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative expenses Fixed selling and administrative expenses Required: 1. What was the master budget variance for July? Was this variance favorable or unfavorable? 2. 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. 4. Prepare pro-forma budgets for activities within its relevant range of operations. Prepare a flexible budget for each of the following two output levels: a. 3,880 units. b. 4,280 units.
The following information is available for Brownstone Products Company for the month of July: Master Actual Budget 3,700 4,000 $ 54,500 $ 60,000 11 10,600 16,000 12,500 13,200 7,100 8,000 10,400 10, 150 Units Sales revenue Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative expenses Fixed selling and administrative expenses Required: 1. What was the master budget variance for July? Was this variance favorable or unfavorable? 2. 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. 4. Prepare pro-forma budgets for activities within its relevant range of operations. Prepare a flexible budget for each of the following two output levels: a. 3,880 units. b. 4,280 units.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:The following information is available for Brownstone Products Company for the month of July:
Master
Budget
4,000
$ 60,000
16,000
Units
Sales revenue
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative expenses
Fixed selling and administrative expenses
Actual
a. 3,880 units.
b. 4,280 units.
3,700
$ 54,500
10,600
12,500
7,100
10,400
13, 200
8,000
10,150
Required:
1. What was the master budget variance for July? Was this variance favorable or unfavorable?
2. 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.
4. Prepare pro-forma budgets for activities within its relevant range of operations. Prepare a flexible budget for each of the following
two output levels:
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