Flexible Budget Performance Report: The comparison between the actual results and flexible budget results is called flexible budget performance report. A flexible budget is prepared based on the actual level of activity. To determine : 6. Explain why the flexible budget performance report provides more useful information to Thompson’s managers than the static budget performance report. What insights can Thompson’s managers draw from this performance report?

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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.

Chapter 24, Problem 6CP

To determine

Flexible Budget Performance Report:

The comparison between the actual results and flexible budget results is called flexible budget performance report. A flexible budget is prepared based on the actual level of activity.

To determine:

6.

Explain why the flexible budget performance report provides more useful information to Thompson’s managers than the static budget performance report. What insights can Thompson’s managers draw from this performance report?

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L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. Question:

L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: 1. Assume there is a 7% sales tax rate in Ohio, where the customer who ordered the boots is located. The sales tax on the order would be $7.63, which L.L. Bean adds to the invoice total. Is the $7.63 added to L.L. Bean's sales revenue? Why or why not?

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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.

Chapter 24, Problem 6CP

To determine

Flexible Budget Performance Report:

The comparison between the actual results and flexible budget results is called flexible budget performance report. A flexible budget is prepared based on the actual level of activity.

To determine:

6.

Explain why the flexible budget performance report provides more useful information to Thompson’s managers than the static budget performance report. What insights can Thompson’s managers draw from this performance report?

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Answer 3

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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.

Chapter 24, Problem 6CP

To determine

Flexible Budget Performance Report:

The comparison between the actual results and flexible budget results is called flexible budget performance report. A flexible budget is prepared based on the actual level of activity.

To determine:

6.

Explain why the flexible budget performance report provides more useful information to Thompson’s managers than the static budget performance report. What insights can Thompson’s managers draw from this performance report?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

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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.

Chapter 24, Problem 6CP

To determine