Example LIT, Inc. manufactures a product that is sold for $26/unit. Sales volume is the measure of activity for variable costs. Budgeted costs are shown below: COGS/unit Shipping cost/unit Miscellaneous cost/unit Salaries Variable Cost/Unit $4 $1 $2 Total Fixed Cost $8,500 $2,300 $3,500 Assume the company prepared a planning budget based on 12,000 units; however, the company actually sold 13,200 units. Actual revenue for the period was $338,200. Actual variable costs incurred included $62,500 in cost of goods sold, $6,125 in shipping costs, and $21,375 in miscellaneous costs. Total actual fixed costs incurred included $9,100 in cost of good sold-9100-2850-35, $2,850 in miscellaneous costs, and $3,500 in salaries. Prepare a flexible budget for the period, and compute the total activity variance and the total revenue and spending variance.

Example LIT, Inc, manufactures a product that is sold for $26/ unit. Sales volume is the measure of activity for variable costs, Budgeted costs are shown below: Assume the company prepared a planning budget based on 12,000 units; however, the company actually sold 13,200 units. Actual revenue for the period was $338,200. Actual variable costs incurred included $62,500 in cost of goods sold, $6,125 in shipping costs, and $21,375 in miscellaneous costs. Total actual fixed costs incurred included $9,100 in cost of good sold-9100-2850-35, $2,850 in miscellaneous costs, and $3,500 in salaries. Prepare a flexible budget for the period, and compute the total activity ariance and the total revenue and spending variance