1 > Data Table 1 4 B The Creative Balloon Company 2 Actual vs. Budget Performance Report 3 For the Month Ended January 31 Master Master Budget Actual Budget Variance 5 Sales volume number of cases sold) 60,000 56,000 6 Sales revenue $ 194,600 $ 173,600 7 Less: Variable expenses 83,800 72,800 8 Contribution margin $ 110,800 $ 100,800 9 Less: Fixed expenses 73,200 72,000 10 Operating income $ 37,600 $ 28,800 4. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) 5. Management would like to determine the portion of the master budget variance that is (a) due to volume being different than originally anticipated and (b) due to some other unexpected cause. Prepare a flexible budget performance report to address these questions, using the actual sales volume of 60,000 units and the budgeted sales volume of 56,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 51,000 to 65,000 units. 6. Using the flexible budget performance report you prepared for Requirement 5, answer the following questions: a. How much of the master budget variance calculated in Requirement 4) for operating income is due to volume being higher than expected? b. How much of the master budget variance for variable expenses is due to some cause other than volume? What could account for the flexible budget variance for sales revenue? d. What is the volume variance for fixed expenses? Why is it this amount? c. Requirements 4 and 5. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) Management would like to determine the portion of the master budget variance that is (a) due to volume being different than originally anticipated, and (b) due to some other unexpected cause. Prepare a flexible budget performance report to address these questions, using the actual sales volume of 60,000 units and the budgeted sales volume of 56,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 51,000 to 65,000 units. Begin by completing the actual and master budget columns of the performance report and then the master budget variances. Then compute the flexible budget column and the remaining variance columns. (Round all amounts to the nearest whole dollar. Label each variance as favorable (F) or unfavorable (U). If the variance is 0, make sure to enter in a "0". A variance of zero is considered favorable.) The Creative Balloon Company Flexible Budget Performance Report For the Month Ended January 31 Flexible Budget Flexible Volume Variance Budget Variance Master Master Budget Variance Actual Budget Sales volume Sales revenue Less: Variable expenses Contribution margin Less: Fixed expenses Operating income