1 Requirements 1. What is the budgeted sales price per unit? 2. What is the budgeted variable expense per unit? 3. What is the budgeted fixed cost for the period? 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 75,000 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 Print Done Data table A B D 1 The Creative Balloon Company 2 Actual vs. Budget Performance Report For the Month Ended July 31 3 Master Budget Variance Master 4 Actual Budget 5 Sales volume (number of cases sold) 60,000 56,000 6 Sales revenue $ 203,200 $ 179 200 7 Less: Variable expenses 80.700 67 200 S 122,500 $ 112,000 8 Contribution margin 9 Less: Fixed expenses 64,900 64.000 10 Operating income $ 57 600 $ 48.000 Print Done