California Company, Inc.
Cost Variance Analysis - Flexible Planning Budget
For the Period Ended December 31
		Expected Planning Budget	Flexible per unit	Actual Flexible Amounts	Activity Variance	Favorable [F] or Unfavorable [U]
Items Sales		300	1	400	100	F
Merchandise Sales	$ 18,000	60	$ 23,520
Cost of Goods Sold	6,000	20	7,920
Gross Profit		12,000	40	15,600
Expenses:
	Wages & Salaries*	4,500	fixed	4,560
	Utilities	300	1	300
	Supplies	1,200	4	1,100
	Rent*	1,800	fixed	1,890
	Depreciation*	240	fixed	240
	Shipping	1,500	5	1,550
total Expenses	9,540		9,640
Net Profit Income	$ 2,460		$ 5,960
*Fixed, does not change with change in sales.

Classes taken		500	600
Revenue ($14/class)		$7,000	$8,400		$1,400	Favorable
Expenses
Wages and Salaries		$3,500	$4,200		$700	Unfavorable
Yoga supplies		$250	$300		$50	Unfavorable
Utilities		$500	$600		$100	Unfavorable
Rent		$500	$500
Insurance		$100	$100
Other Expenses		$250	$300		$50	Unfavorable
Total Expense		$5,100	$6,000		$900	Unfavorable
Net Operating Income		$1,900	$2,400		$500	Favorable

1. use the information above to complete the variance amounts for each line item and indicate whether they are favorable or unfavorable.
2. discuss the possible reasons for some of the variance.