Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE HELP! Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,080 units for $760 each. During this month, the

PLEASE HELP!

Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,080 units for $760 each. During this month, the company incurred $594,000 total variable costs and $181,400 total fixed costs. The master budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 1,080 units. 2. Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. 3. Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable.image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Comparison of Actual and Budgeted Operating Income

SCHMIDT MACHINERY COMPANY
Analysis of Operating Income
For October 2022
(1) Actual Operating Income (2) Master Budget (3) Variances
Units 780 1,000 220 U*
Sales $ 639,600 100% $ 800,000 100% $ 160,400 U
Variable costs 350,950 55 450,000 56 99,050 F**
Contribution margin $ 288,650 45% $ 350,000 44% $ 61,350 U
Fixed costs 160,650*** 25 150,000 19 10,650 U
Operating income $ 128,000 20% $ 200,000 25% $ 72,000 U

*U denotes an unfavorable effect on operating income.

**F denotes a favorable effect on operating income.

***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30,000.

Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000.

Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,080 units for $760 each. During this month, the company incurred $594,000 total variable costs and $181,400 total fixed costs. The master budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 1,080 units. 2. Compute for October 2022 : a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. 3. Compute for October 2022 : a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable. Complete this question by entering your answers in the tabs below. Prepare a flexible budget for the production and sale of 1,080 units. Complete this question by entering your answers in the tabs below. Compute for October 2022 : a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. Complete this question by entering your answers in the tabs below. Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Pricing Strategy Audit

Authors: Kent B. Monroe

1st Edition

1907766006, 978-1907766008

More Books

Students also viewed these Accounting questions