Case 1 The Aisha Company uses a flexible budget to control its costs. The components of the Companys March budget report are shown in the table below:

Aisha Company

Flexible budget

July 2021

		Budget Production units		Actual	Variance	Favorable Unfavorable
	Per Unit	1,000	2,000	2,000
Sales	$ 8			18,000
Variable Costs
Sales commissions	1.50			2,600
Advertising	2.10			4,300
Travel expenses	1.20			2,200
Total variable costs				9,100
Fixed expenses		2,500	2,500	2,500

Required:

1. Complete the table above for the budgeted amounts

2. Compare budget at the 2,000 unit level to actual and determine variances

3. Evaluate and write if the variance is favorable or unfavorable and explain why.

Answer

		Budget Production units		Actual	Variance	Favorable Unfavorable
	Per Unit	1,000	2,000	2,000