1.
Prepare a flexible budget for the production and sale of 950 units.
1.
Explanation of Solution
Prepare a flexible budget for the production and sale of 950 units.
Figure (1)
2. a
Compute the sales volume variance, in terms of operating income and indicate whether this variance is favorable (F), or favorable (U).
2. a
Explanation of Solution
Compute the sales volume variance, in terms of operating income and indicate whether this variance is favorable (F), or favorable (U).
2. b
Compute the sales volume variance, in terms of contribution margin and indicate whether this variance is favorable (F), or favorable (U).
2. b
Explanation of Solution
Compute the sales volume variance, in terms of contribution margin and indicate whether this variance is favorable (F), or favorable (U).
3. a
Calculate total flexible
3. a
Explanation of Solution
Calculate total flexible budget variance and indicate whether this variance is favorable (F), or favorable (U).
Working note:
Calculate operating income for the month of October 2019:
| Actual Operating Results | |
| For the Month of October 2019 | |
| Sales (950 units × $835.00 per unit) | $793,250 |
| Less: Total variable expenses | $475,000 |
| Contribution margin | $318,250 |
| Less: Fixed expenses | $180,000 |
| Operating income | $138,250 |
Table (1)
3. b
Calculate total variable cost flexible budget variance and indicate whether this variance is favorable (F), or favorable (U).
3. b
Explanation of Solution
Calculate total variable cost flexible budget variance and indicate whether this variance is favorable (F), or favorable (U).
3. c
Calculate total fixed cost flexible-budget variance and indicate whether this variance is favorable (F), or favorable (U).
3. c
Explanation of Solution
Calculate total fixed cost flexible-budget variance and indicate whether this variance is favorable (F), or favorable (U).
3. d
Calculate selling price variance and indicate whether this variance is favorable (F), or favorable (U).
3. d
Explanation of Solution
Calculate selling price variance and indicate whether this variance is favorable (F), or favorable (U).
Prepare analysis of operating income:
Figure (2)
Calculate total master (static) budget variance:
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Chapter 14 Solutions
COST MANAGMENT WITH CONNECT ACCESS
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