3rd Edition

ISBN: 9781323761434

Author: Horngren

Publisher: PEARSON C

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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…

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…

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Textbook Question

Chapter 23, Problem E23.16E

Preparing a flexible budget performance report Learning Objective 1

Murphy Company managers received the following incomplete performance report;

MURPHY COMPANY Flexible Budget Performance Report For the Year Ended July 31,2018

	Actual Results	Flexible Budget Variance	Flexible Budget	Sales Volume Variance	Static Budget
Units	35,000	(a)	35,000	5,000 F	(g)
Sales Revenue	$ 219,000	(b)	$ 219,000	$ 27,000 F	(h)
Variable Expenses	85,000	(c)	84,000	13,000 U	(i)
Contribution Margin	134,000	(d)	135,000	14,000 F	(j)
Fixed Expenses	105,000	(e)	100,000	0	(k)
Operating Income	$ 29,000	(f)	$ 35,000	$ 14,000 F	(l)

Complete the performance report. Identify the employee group that may deserve praise and the group that may be subject to criticism. Give your reasoning.

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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Chapter 23, Problem E23.15E

Chapter 23, Problem E23.17E

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