Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that in October 2019 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,020 units for $720 each. During this month, the company incurred

image text in transcribed

image text in transcribed

image text in transcribedimage text in transcribed

Assume that in October 2019 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,020 units for $720 each. During this month, the company incurred $520,200 total variable costs and $180,100 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 1,020 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 1 Required 2 Required 3 Prepare a flexible budget for the production and sale of 1,020 units. Units sold Sales Required 1 Required 2 > Complete this question by entering your answers in the tabs below. 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 (U). b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable (F) or unfavorable (U). Show less Sales Volume Variance Operating income Contribution margin Complete this question by entering your answers in the tabs below. 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). 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 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 220U* Sales $639,600 100% $800,000 100% $ 160,400U Variable costs |_ 350,950 55 450,000 56 99,050F** Contribution margin $288,650 45% $350,000 44% $ 61,350U Fixed costs 160.650*** 25 150,000+ 19 10,650U Operating income $128,000 20% $200,000 25% $ 72,000U *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income. ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30.000. #Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting Foundations And Evolutions

Authors: Amie Dragoo, Michael Kinney, Cecily Raiborn

10th Edition

1618533533, 9781618533531

More Books

Students also viewed these Accounting questions

Question

=+a) Draw the decision tree.

Answered: 1 week ago