Please answer requirements 4 & 5.
The Lively Balloon Company produces party balloons that are sold in multi-pack cases. To follow is the company's performance report in contribution margin format for August: :: (Click the icon to view the performance report in contribution margin format.) Read the requirements .... Requirement 1. What is the budgeted sales price per unit? The budgeted sales price per unit is $ 3.50 Requirement 2. What is the budgeted variable expense per unit? The budgeted variable expense per unit is $ 1.40 Requirement 3. What is the budgeted fixed cost for the period? The budgeted fixed cost for the period is $ 71,000 Requirements 4 and 5. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) Management would like to determine the portion of the master budget variance that is (a) due to volume being different than originally anticipated, and (b) due to some other unexpected cause Prepare a flexible budget performance report to address these questions, using the actual sales volume of 59,500 units and the budgeted sales volume of 54,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 49,000 to 64,500 units. Begin by completing the actual and master budget columns of the performance report and then the master budget variances. Then compute the flexible budget column and the remaining variance columns. (Round all amounts to the nearest whole dollar. Label each variance as favorable (F) or unfavorable (U). If the variance is 0, make sure to enter in a "0". A variance of zero is considered favorable.) The Lively Balloon Company Flexible Budget Performance Report For the Month Ended August 31 Flexible Budget Flexible Volume Variance Budget Variance Master Master Budget Variance Budget Actual 59,500 Sales volume Sales revenue 213000 86.100 Less: Variable expenses Contribution margin 126,900 71,800 Less: Fixed expenses $ 55,100 Operating income V Data Table D 1 A B The Lively Balloon Company Actual vs. Budget Performance Report For the Month Ended August 31 N Master Budget Master Budget Variance Actual Sales volume (number of cases 5 sold) 6 Sales revenue 7 Less: Variable expenses 8 Contribution margin 9 Less: Fixed expenses 10 Operating income 59,500 54,000 $ 213,000 $ 189,000 86,100 75,600 $ 126,900 $ 113,400 71,800 71,000 $ 55,100 $ 42,400 Print Done 1 Requirements 1. What is the budgeted sales price per unit? 2. What is the budgeted variable expense per unit? 3. What is the budgeted fixed cost for the period? 4. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) 5. Management would like to determine the portion of the master budget variance that is (a) due to volume being different than originally anticipated and (b) due to some other unexpected cause. Prepare a flexible budget performance report to address these questions, using the actual sales volume of 59,500 units and the budgeted sales volume of 54,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 49,000 to 64,500 units. 6. Using the flexible budget performance report you prepared for Requirement 5, answer the following questions: a. How much of the master budget variance (calculated in Requirement 4) for operating income is due to volume being higher than expected? b. How much of the master budget variance for variable expenses is due to some cause other than volume? What could account for the flexible budget variance for sales revenue? d. What is the volume variance for fixed expenses? Why is it this amount? C. Print Done
