5. You are the budget expert for M&C Manufacturing Company. The Master Budget and Actual Results for 2013 are listed below. Your general manger, however, wants a comparison based more closely on activity levels. You then develop a comparison with variances at the actual level of sales. 84 Master Budget 98,000 $1,960,000 Actual Amounts 82,000 $1,640,000 Variance wv/Unfav 16,000 U 320,000 U 85 Units 86 Sales 87 Variable costs: 88 Cost of Goods Sold 89 Sales Commissions 90 Shipping Cost 91 Total variable costs 92 Contribution Margin 93 Fixed costs: 94 Salary Exp 95 Depr Exp 96 Rent Exp 97 Total fixed costs 98 Operating Revenue $980,000 $107,800 $53,900 $1,141,700 $818,300 S775,000 $77,500 $43,000 $895,500 $744,500 205,000 30,300 10,900 246,200 73,800 F F F F U $300,000 $214,000 $175,750 $689,750 $128,550 $300,000 $214,000 $175,750 $689,750 $54,750 73,800 U 99 100 Which, if any, of the flexible budget variances should be investigated if using a 6% variance benchmark? 101 F Budget Formula Flexible Budget Actual Variance U/F % of Variance Investigate ? 20 FLEXIBLE BUDGET AT ACTUAL SALES ACTIVITY LEVEL 21 22 23 Units 24 Sales 25 Variable costs: 26 Cost of Goods Sold 27 Sales Commissions 28 Shipping Cost 29 Total variable costs 30 Contribution Margin 31 Fixed costs: 32 Salary Exp 33 Depr Exp 34 Rent Exp 35 Total fixed costs 36 Operating Revenue 20