OI FLEXIBLE BUDGET AND SALES VOLUME VARIANCES (2 marka) Smithson Enterprises manufactures tires for the Formula I racing circuit For December 2020, the company huduwted the following: Tres manufactured and sold Selling price per te 3. 115 5 Required Ia. Create Level 1 variance analysis to calculate the static-bodge variances 1. What percentages each statiche variance relative to listen toont? I. Management has a policy of investigating any variances greater than for men and cats Apply conditional formatting to determine which variances should be investigated green OK, RED - LOOK INTO FURTHER (10 mark) Actual Variance State Hudget lbal Units Rovenac Variable Costs Contribution Marin Fixed Costs Operating Income Variable cost per time Total fixed costs 5 $ 77 54.00 Actual results for December were Tires matured and sold Selling price per time Total variable costs Total fixed costs $ S $ 3.100 114 266.000 50.000 Static Budget 2. Create a level 2 analysis to calculate the flexible trudget and sales volume variances. (marks Actual Flex Budget Revenues Variable Costs Contribution Main $ $ S 07 03 E F G H 3. Assume the role of management accountant. A. Why does the level 2 analysis provide greater insight? Do not provide a textbook answer. This must be in your own words in a way that a business owner (non-accountant) could understand. (2 marks) b. List potential causes of the flexible budget variances. Be specific. Indicating that the actual price was different than budgeted is not sufficient. You must indicate potential reasons why the actual selling price was different. (4 marks) Revenues (two causes): + D E F G H Variable Costs (two causes): 0 c. List two recommendations for management to follow up on. (4 marks) Recommendation 1: Recommendation 2: OI FLEXIBLE BUDGET AND SALES VOLUME VARIANCES (2 marka) Smithson Enterprises manufactures tires for the Formula I racing circuit For December 2020, the company huduwted the following: Tres manufactured and sold Selling price per te 3. 115 5 Required Ia. Create Level 1 variance analysis to calculate the static-bodge variances 1. What percentages each statiche variance relative to listen toont? I. Management has a policy of investigating any variances greater than for men and cats Apply conditional formatting to determine which variances should be investigated green OK, RED - LOOK INTO FURTHER (10 mark) Actual Variance State Hudget lbal Units Rovenac Variable Costs Contribution Marin Fixed Costs Operating Income Variable cost per time Total fixed costs 5 $ 77 54.00 Actual results for December were Tires matured and sold Selling price per time Total variable costs Total fixed costs $ S $ 3.100 114 266.000 50.000 Static Budget 2. Create a level 2 analysis to calculate the flexible trudget and sales volume variances. (marks Actual Flex Budget Revenues Variable Costs Contribution Main $ $ S 07 03 E F G H 3. Assume the role of management accountant. A. Why does the level 2 analysis provide greater insight? Do not provide a textbook answer. This must be in your own words in a way that a business owner (non-accountant) could understand. (2 marks) b. List potential causes of the flexible budget variances. Be specific. Indicating that the actual price was different than budgeted is not sufficient. You must indicate potential reasons why the actual selling price was different. (4 marks) Revenues (two causes): + D E F G H Variable Costs (two causes): 0 c. List two recommendations for management to follow up on. (4 marks) Recommendation 1: Recommendation 2
