Assume that in October 2019 the Schmidt Machinery Company...
Assume that in October 2019 the Schmidt Machinery Company {Exhibit 14.1} manufactured and sold 910 units for $770 each. During this month, the company incurred $509,600 total variable costs and $181,500 total xed costs. The master {static} budget data for the month are as given in Exhibit 14.1. Required: '1. Prepare a exible budget for the production and sale of 9'10 units. 2. Compute for October 2019: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable [F] or unfavorable [U]. D. "he sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable [F] or unfavorable (U). 3. Compute for October 2019: a. The total exiblebudget (FE!) variance. Indicate whether this variance was favorable {F} or unfavorable [U]. b. "he total variable cost flexiblebudget variance. Indicate whether this variance was favorable {F} or unfavorable {U}. c. The total xed cost flexiblebudget {FB} variance. Indicate whether this variance was favorable {F} or unfavorable {U}. [1. "he selling price variance. Indicate whether this variance was favorable {F} or unfavorable {U}. Complete this question by entering your answers in the labs below. ' Required 1 Required 2 Required 3 Prepare a exible budget for the production and sale of 910 units. Required 1 Required ?) Required 3 Compute for October 2015 : a . The sales Volume variance , in terms of operating income . Indicate whether this variance was favorable ( Fjor unfavorable [W] . 6 . The sales volume variance , in terms of contribution margin . Indicate whether this variance was favorable (" Fj or unfavorable* " ( n ) Show less A Sales Volume Variance* Operating income* Contribution marginRequired 1 Required 2 Required } Compute for October 2014 . a . The total flexible- budget ( FE ; Variance . Indicate whether this variance was favorable ( F ) or unfavorable . 6 . The total variable cost flexible-budget variance . Indicate whether this variance was favorable ( F) or unfavorable ( L ) . C. The total Fixed cost flexible- budget ( FEI Variance . Indicate whether this variance was favorable ( F ) or unfavorable ( L ) . 4 . The selling price variance . Indicate whether this variance was favorable (* Fjor unfavorable [W]` Show less A Q . The total flexible -budget ( FE ; variance* The total variable cost flexible -budget Variance The total fixed cost flexible -budget ( FE ) Variance* \\The selling price variance*EXHIBIT 14.1 Comparison of Actual and Budgeted Operating Income* SCHMIDT MACHINERY COMPANY* Analysis of Operating Income* For October 2019 ( 1 ) ( 2 ) ( 3 ) Actual Operating Income Master ( Static ) Budget Variances Units 780 1. 000 ZZ0TT* Sales $639. 600 10:05% $8:00.000 100% $ 160, 40OTT Variable costs 350. 950 55 450.0.00 56 90. 05OF` Contribution margin\\ $ 288. 650 45 5% $350. 000 61. 35021 Fixed costs 160.6517* 25 150. 00 07 10. 650LT Operating income $ 128.000 20% $ 2010. 0.00 25 %0 $ 72, 0001 * IT denotes an unfavorable Effect on operating income* * * F denotes & favorable Effect on operating income . *# Actual fixed factory overhead cost = $130. 450` actual fired selling and administrative costs = $30.0.010. + Budgeted fixed factory overhead cost = $120. 000` budgeted fixed selling and administrative costs = $30.0.00
