Cost Accounting- Flexible Budget Analysis

Cost Acc & Mgt (ACCT3324) GROUP PRESENTATION QUESTION (Lecture 6) Flexible-budget analysis Eagle Power is a market leader in making batteries. The company has been operating for a number of years in the industry and has earned considerable reputation. The company has the operating budget for April 2013 as followed Number of batteries Selling price per battery Variable cost per battery Fixed costs for the month 15,000 S 20 145,000 However, the actual results for the April 2013 were as follows: Number of batteries produced and sold Average selling price per battery Variable cost per battery Fixed costs for the month 12,000 S 21 150,000 The managing director of the company noticed that the operating income for April 2013 was much worse than expected, although there is a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. As the company's management accountant, you have been asked to provide explanations for the unsatisfactory April results. Required: 1. Prepare a master-budget-based variance analysis of the April performance for the company. 2. Prepare a flexible-budget-based variance analysis of the April performance for the company. 3. Why might the company management find the flexible-budget-based variance analysis more informative than the master-budgeted-based variance analysis? Explain your