#3 only.

14-23 Flexible Budgets; Total Operating Income Variance; Breakdown of the Total Operating Income Variance; Spreadsheet Application The following information is available for Brownstone Products Company for the month of July Units Sales revenue Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative expenses Fixed selling and administrative expenses Actual Master Budget 3.800 4,000 $53,200 $60,000 19.000 16,000 16.000 15,000 7,700 8,000 10.000 9,000 Required 1. What was the total operating income variance for July, rounded to the nearest whole dollar? (Note: This variance is also called the master (static) budget variance for the period.) Was this variance favorable (F) or unfavorable (U)? 2. Set up a spreadsheet to compute the July sales volume variance and the flexible-budget variance for the month, both Page 605 in terms of contribution margin and in terms of operating income. Round all dollar amounts to the nearest whole number 3. Discuss implications of these variances on strategic cost management for Brownstone. Variance F/U 16,800.00) Unfavorable (3,000.00) Unfavorable Calculation of Total Operating Income Variance for July : Actual Master Budget Salon Revenue 53,200.00 $ 60,000.00 $ Lese: Variable Manufacturing Cont 119,000.00) $ (16,000.00) $ Loss: Variable Selling & Administrative I'xponacs (7,700.000 $ 18,000.00) S Contribution Margin 26,500.00 $ 36,000.00 $ Lus: Fixed Manufacturing Costs $ 116,000.00 $ 115,000.00) $ Loss: Fixed Selling & Administrative xpenses 110,000.00 $ 19,000.00 $ Operating Income 500.00 $ 12,000.00 $ 300.00 Favorable 19,500.00) Unfavorable (1.000.00) Unfavorable (1,000.00) Unfavorable (11,500.00) Unfavorable 2) Sales volume variance and flexible-budget variance for the month of July: Flexible Budget Sales Volume Master Actual Flexible Budget Variance Variance Budget (a) (b=c-a) [c=e* (3.800 4,000)) (d=c-c) (e) Units 3.800 - None 3.800 200 U 4,000 Sales revenue $53,200 $3.800 U $57,000 $3,000 $60,000 Less: Variable cost Manufacturing cost $19.000 $3,800 U $15,200 5800 F $16,000 Selling and achinistrative cost $7,700 $100 U $7,600 $400 F $8,000 Total variable costs $26,700 $3,900 U $22,800 $1,200 F $24,000 Contribution margin $26,500 $7.700 U $34,200 $1,800 U S 36,000 Less: Fixed costs Manufacturing cost $16.000 $1,000 U $15,000 SO None $15,000 Selling and administrative cost $10,000 $1,000 U $9.000 50 None $9.000 Total fixed costs $26.000 $2.000 U $24,000 $0 None $24,000 Operating income $500 $9.700 U $10,200 $1,800 U $12.000 Sales Volume Variance Contribution margin Operating income $7,700 U $9.700 U Flexible Budget Variance Contribution margin Operating income $1,800 U $1,800 U