Question
1. Prepare a flexible budget performance report for JulyJuly. 2. What was the effect on New BostonNew Boston's operating income of selling 2 comma 0002,000
1.
Prepare a flexible budget performance report for
JulyJuly.
2.
What was the effect on
New BostonNew Boston's
operating income of selling
2 comma 0002,000
units more than the static budget level of sales?
3.
What is
New BostonNew Boston's
static budget variance for operating income?
4.
Explain why the flexible budget performance report provides more useful information to
New BostonNew Boston's
managers than the simple static budget variance. What insights can
New BostonNew Boston's
managers draw from this performance report?
New Boston Technologies
Flexible Budget
For the Month Ended July 31, 2016
Budget
Amount
per Unit
Units
6,500
8,000
10,000
Sales Revenue
$21
$136,500
$168,000
$210,000
Variable Expenses
11
71,500
88,000
110,000
Contribution Margin
65,000
80,000
100,000
Fixed Expenses
50,000
50,000
50,000
Operating Income
$15,000
$30,000
$50,000
Technologies manufactures capacitors for cellular base stations and other communications applications. The company's
JulyJuly
20162016
flexible budget shows output levels of
6 comma 5006,500,
8 comma 0008,000,
and
10 comma 00010,000
units. The static budget was based on expected sales of
8 comma 0008,000
units.
LOADING...
(Click the icon to view the flexible budget.) The company sold
10 comma 00010,000
units during
JulyJuly,
and its actual operating income was as follows:
LOADING...
(Click the icon to view the income statement.)Read the requirements
LOADING...
.
New Boston Technologies
Income Statement
For the Month Ended July 31, 2016
Sales Revenue
$217,000
Variable Expenses
115,100
Contribution Margin
101,900
Fixed Expenses
51,000
Operating Income
$50,900
Requirement 1. Prepare a flexible budget performance report for
JulyJuly.
(Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (F)/Unfavorable (U) input blank.)
| New Boston Technologies | ||||||||
| Flexible Budget Performance Report | ||||||||
| For the Month Ended July 31, 2016 | ||||||||
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| Budget |
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| Amounts | Actual | Budget | Flexible | Volume | Static | ||
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| Per Unit | Results | Variance | Budget | Variance | Budget | ||
| Units |
| 10,000 |
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| 10,000 |
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| 8,000 |
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| Contribution Margin |
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| Fixed Expenses |
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| Operating Income |
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Interpreting and Analyzing Financial Statements
Authors: Karen P. Schoenebeck, Mark P. Holtzman
6th edition
132746247, 978-0132746243
