Magic Company projected yearly sales of 13,000 units at $16.00 per unit. Actual sales for the year were 14,000 units at $18.00 per unit. Variable expenses, budgeted at $8.00 per unit, actually amounted to $8.50 per unit. Fixed expenses, budgeted at $40,000, actually totaled $35,000.

Instructions:

Prepare the Magic Company's income statement performance report for the year ended December 31, including both flexible budget variances and sales volume variances.

Answer: The Magic Company

Income Statement Performance Report

Year Ended December 31

	Actual Results at Actual Prices	Flexible Budget Variances	Flexible Budget for Actual Volume Achieved	Sales Volume Variances	Static (Master) Budget
Output
Sales revenue
Variable expenses
Fixed expenses
Total expenses
Operating income