Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 940 units for $730 each. During this month, the company incurred $441,800 total variable costs and $180,900 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 940 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
• Required 2
• Required 3

Prepare a flexible budget for the production and sale of 940 units.

Required 1

Prepare a flexible budget for the production and sale of 940 units.

Units sold
Sales
	$0
	$0

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.

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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