Question
ESPANA CORPORATION The ESPANA CORPORATION produces chairs. A new accounting intern at ESPANA has accidently deleted the calculations on the companys variance analysis calculations for
ESPANA CORPORATION
The ESPANA CORPORATION produces chairs. A new accounting intern at ESPANA has accidently deleted the calculations on the companys variance analysis calculations for the year ended December 31, 2016. The following table is what remains of the data:
|
|
Actual Results | Revenue and Spending Variances |
Flexible Budget |
Activity Variances |
Planning Budget |
| Units sold | 130,000 |
|
|
| 120,000 |
| Revenues | $715,000 |
|
|
| $420,000 |
| Variable manufacturing costs | $515,000 |
|
|
| $240,000 |
| Fixed manufacturing costs | $140,000 |
|
|
| $120,000 |
| Gross Margin | $60,000 |
|
|
| $60,000 |
You are called in to determine the missing numbers.
REQUIRED:
What is the difference between a planning budget and a flexible budget?
What are some reasons that there can be a difference between the actual results and the planning budget figures.
Explain what is an activity variance.
Explain what is a revenue variance.
Explain what is a spending variance.
Calculate all the required variances in this problem.
What are the actual and budgeted selling prices? What are the actual and budgeted variable costs per unit?
Review the variances you have calculated and discuss possible causes and potential problems.
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