Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,040 units for $715 each. During this month, the company incurred $457,600 total variable costs and $180,600 total fixed costs. The master budget data for the month are as given in Exhibit 14.1.

Required:

1. Prepare a flexible budget for the production and sale of 1,040 units.

2. Compute for October 2022:

a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable.

b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable.

3. Compute for October 2022:

a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable.

b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable.

c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable.

d. The selling price variance. Indicate whether this variance was favorable or unfavorable.

Required 1: Prepare a flexible budget for the production and sale of 1,040 units.

Each section under sales has dropdown menu options

First Bar - Fixed Costs or Variable Costs

Second Bar - Contribution Margin or Gross Profit

Third Bar - Fixed Costs or Variable Costs

Fourth Bar - Budgeted Operating Income or Budgeted Operating Loss

Required 2:

Compute for October 2022:

a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable.

b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable.

	Sales Volume Variance
Operating income
Contribution margin

Required 3:

Compute for October 2022:

a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable.

b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable.

c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable.

d. The selling price variance. Indicate whether this variance was favorable or unfavorable.

Units sold Sales $ 0 $ 0 a. The total flexible budget variance b. The total variable cost flexible budget variance c. The total fixed cost flexible budget variance d. The selling price variance