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 fixed costs. The master (static) budget data for the month are as given in Exhibit 14.1 Required 1. Prepare a flexible budget for the production and sale of 910 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). b. The 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 flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U) b. The total variable cost flexible-budget variance. Indicate whether this variance was favorable (F) or unfavorable (U). c. The total fixed cost flexible-budget (FB) variance. Indicate whether this variance was favorable (F or unfavorable (U) d. The selling price variance. Indicate whether this variance was favorable (F) or unfavorable (U). Complete this question by entering your answers in the tabs below Required 1Required 2 Required 3 Prepare a flexible budget for the production and sale of 910 units Units sold Sales EXHIBIT 14.1 Comparison of Actual and Budgeted Operating Income SCHMIDT MACHINERY COMPANY Analysis of Operating Income For October 2019 Actual Operating Income Master (Static) Budget Variances 780 $639,600 350.950 220U 160.40U Units Sales Variable costs Contribution margin Fixed costs Operating income 1,000 $800,000 55 450,000 $350,000 25 150,000 $200,000 100% 100% $ $288 45% 44% $ 61350U 19 25% $ 72,000U 160.650 $128,000 20% *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income *8*Actual fixed factory overhead cost $130,650; actual fixed selling and administrative costs $30,000. fBudgeted fixed factory overhead cost $120,000; budgeted fixed selling and administrative costs $30,000 Required 1 Required 2 Required 3 Compute for October 2019: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable (F) or unfavorable b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable (F) or unfavorable Show less Sales Volume Variance Operating income Contribution margin Required 1 Required 2 Required 3 Compute for October 2019: a. The total flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U) b. The total variable cost flexible-budget variance. Indicate whether this variance was favorable (F) or unfavorable (U) c. The total fixed cost flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U) d. The selling price variance. Indicate whether this variance was favorable (F) or unfavorable (U) ) ce aranece ndicate Show less a. The total flexible-budget (FB) variance b. The total variable cost flexible-budget variance c. The total fixed cost flexible-budget (FB) variance d. The selling price variance
