Top managers of McKnight Industries predicted 2024 sales of 15,000 units of its product at a unit price of $8.50. Actual sales for the year were 14,200 units at $9.50 each. Variable costs were budgeted at $2.80 per unit, and actual variable costs were $2.90 per unit. Actual fixed costs of $47,000 exceeded budgeted fixed costs by $5,200. Prepare McKnight's flexible budget performance report. What variance contributed most to the year's favorable results? What caused this variance? Prepare a flexible budget performance report for the year. First, complete the flexible budget performance report through the contribution margin line, then complete the report through the operating income line. Finally, compute the total variances. (Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (F)/Unfavorable (U) input blank.)
Top managers of McKnight Industries predicted 2024 sales of 15,000 units of its product at a unit price of $8.50. Actual sales for the year were 14,200 units at $9.50 each. Variable costs were budgeted at $2.80 per unit, and actual variable costs were $2.90 per unit. Actual fixed costs of $47,000 exceeded budgeted fixed costs by $5,200. Prepare McKnight's flexible budget performance report. What variance contributed most to the year's favorable results? What caused this variance? Prepare a flexible budget performance report for the year. First, complete the flexible budget performance report through the contribution margin line, then complete the report through the operating income line. Finally, compute the total variances. (Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (F)/Unfavorable (U) input blank.)
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
100%
Top managers of
McKnight
Industries predicted
2024
sales of
15,000
units of its product at a unit price of
$8.50.
Actual sales for the year were
14,200
units at
$9.50
each. Variable costs were budgeted at
$2.80
per unit, and actual variable costs were
$2.90
per unit. Actual fixed costs of
$47,000
exceeded budgeted fixed costs by
$5,200.
Prepare
McKnight's
flexible budget performance report. What variance contributed most to the year's favorable results? What caused this variance?Prepare a flexible budget performance report for the year. First, complete the flexible budget performance report through the contribution margin line, then complete the report through the operating income line. Finally, compute the total variances. (Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (F)/Unfavorable (U) input blank.)
Transcribed Image Text:McKnight Industries
Flexible Budget Performance Report
For the Year Ended December 31, 2024
1
2
3
4
5
(1) - (3)
(3) - (5)
Budget
Flexible
Sales
Amounts
Actual
Budget
Flexible
Volume
Static
Per Unit
Results
Variance
Budget
Variance
Budget
Units
14,200
14,200
15,000
Sales Revenue
8.50
170,400
49,700 F
120,700
Variable Costs
2.90
Contribution Margin
LO
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