The following information was drawn from the accounting records of Smith Company Static Budget Flexible Budget Actual Results Sales $ 10,500 $ 13,000 $ 13,900 Cost of Goods Sold (6,100 ) (7,400 ) (6,950 ) Gross Margin 4,400 5,600 6,950 Variable Cost (2,100 ) (2,550 ) (2,850 ) Fixed Cost (1,100 ) (1,100 ) (1,400 ) Net Income $ 1,200 $ 1,950 $ 2,700 Based on this information the Multiple Choice cost of goods sold flexible budget variance is a $400 unfavorable variance. cost of goods sold volume variance is a $400 favorable variance. cost of goods sold flexible budget variance is a $1,300 favorable variance. cost of goods sold volume variance is a $1,300 unfavorable variance.
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.
The following information was drawn from the accounting records of Smith Company
| Static Budget | Flexible Budget | Actual Results | ||||||||||||||||
| Sales | $ | 10,500 | $ | 13,000 | $ | 13,900 | ||||||||||||
| Cost of Goods Sold | (6,100 | ) | (7,400 | ) | (6,950 | ) | ||||||||||||
| Gross Margin | 4,400 | 5,600 | 6,950 | |||||||||||||||
| Variable Cost | (2,100 | ) | (2,550 | ) | (2,850 | ) | ||||||||||||
| Fixed Cost | (1,100 | ) | (1,100 | ) | (1,400 | ) | ||||||||||||
| Net Income | $ | 1,200 | $ | 1,950 | $ | 2,700 | ||||||||||||
Based on this information the
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cost of goods sold flexible
budget variance is a $400 unfavorable variance. -
cost of goods sold volume variance is a $400 favorable variance.
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cost of goods sold flexible budget variance is a $1,300 favorable variance.
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cost of goods sold volume variance is a $1,300 unfavorable variance.
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