Flexible budget preparation and analysis. (25-30 minutes) NorlandNorge, AS, produces corporate notebooks. Each notebook is designed for an individual customer. The company’s operating budget for September 1999 included these data: mki7

The managing director of the company observed that the operating profit for September was much less than anticipated, despite a higher-thanbudgeted selling price and a lower-than-budgeted variable cost per unit.
You have been asked to provide explanations for the disappointing September results.
Norland-Norge develops its flexible budget on the basis of budgeted revenue per output unit and variable costs per output without a detailed analysis of budgeted inputs.
REQUIRED 1. Prepare a Level 1 analysis of the September performance.
2. Prepare a Level 2 analysis of the September performance.
3. Why might Norland-Norge find the Level 2 analysis more informative than the Level 1 analysis? Explain your answer. lop1

Transcribed Image Text:

Number of notebooks Selling price per book Variable costs per book Total fixed costs for the month The actual results for September 1999 were Number of notebooks produced and sold Average selling price per book Variable costs per book Total fixed costs for the month 15,000 NKr 20 NKr 8 NKr 145,000 12,000 NKr 21 NKr 7 NKr 150,000