Actual Results

Revenue & Spending Variances

Flexible Budget

Activity Variances

Planning Budget

Sales

$ 6,156,000

$ 324,000

U

$ 6,480,000

$ 480,000

F

$ 6,000,000

Less V.C.

DM

$ 3,018,600

$ 491,400

F

$ 3,510,000

$ 510,000

U

$ 3,000,000

DL

$ 550,800

$ 97,200

F

$ 648,000

$ 148,000

U

$ 500,000

V-MOH

$ 272,160

$ 12,960

U

$ 259,200

$ 59,200

U

$ 200,000

V-S&A

$ 270,000

$ 54,000

F

$ 324,000

$ 24,000

U

$ 300,000

CM

$ 2,044,440

$ 305,640

F

$ 1,738,800

$261,200

U

$ 2,000,000

Less FC

F-MOH

$ 768,000

$ 32,000

F

$ 800,000

$0

$ 800,000

F-S&A

$ 455,000

$ 5,000

U

$ 450,000

$0

$ 450,000

NOI

$ 821,440

$ 332,640

F

$ 488,800

$261,200

U

$ 750,000

2. Suppose your boss, Mr. Aldrin, is in the process of evaluating how well the company performed in terms of generating revenues and controlling costs. Mr. Aldrin would like to compare the actual income statement with the planning budget income statement. Could you use the variance analysis from Part 1 to persuade him, who is kind of stubborn, that the company should compare the actual income statement with the flexible budget income statement instead?