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E7-23 Bank Organizer Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is

E7-23

Bank Organizer Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the customer's bank. The company's operating budget for September 2017 included these data: Data table:

The budgeted amounts for September 2017 were:

Number of checkbooks

13,000

Selling price per book

$19

Variable cost per book

$6

Fixed costs for the month

$130,000

The actual results for September 2017 were as follows:

Number of checkbooks produced and sold

10,600

Average selling price per book

$20

Variable cost per book

$5

Fixed costs for the month

$135,300

The executive vice president of the company observed that the operating income for September was much lower than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. As thecompany's management accountant, you have been asked to provide explanations for the disappointing September results.

Bank Organizer develops its flexible budget on the basis of budgeted per-output-unit revenue andper-output-unit variable costs without detailed analysis of budgeted inputs.

Requirements

1.

Prepare a static-budget-based variance analysis of the September performance.

2.

Prepare a flexible-budget-based variance analysis of the September performance.

3.

Why might Bank Organizer find the flexible-budget-based variance analysis more informative than the static-budget-based variance analysis? Explain your answer.

Actual flexible-budget-based variance
Results
Units sold
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income (loss)

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