Question
Please use the following data for problems #2-5: Onyx Company prepared a static budget at the beginning of the month. It's the end of the
Please use the following data for problems #2-5:
Onyx Company prepared a static budget at the beginning of the month. It's the end of the month and the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $80 per unit
Variable expense: $40 per unit Fixed expenses: $37,000 per month
Actual results: Sales volume: 990 units Price: $90 per unit
Variable expense: $45 per unit Fixed expenses: $34,000 per month
Complete the grid below to calculate the variances and then answer the following questions.
Actual | Flexible Budget | Flexible | Sales Volume | Static | |||
Results | Variance | Budget | Variance | Budget | |||
Units/volume | 990 | 0 | 990 | 10 | U | 1,000 | |
Sales revenue * | $80,000 | ||||||
- Variable expenses** | 40,000 | ||||||
= Contribution margin | 40,000 | ||||||
- Fixed expenses | 37,000 | ||||||
= Operating income/(loss) | $3,000 | ||||||
* price/unit | $90.00 | $80.00 | $80.00 | ||||
**var cost/unit | $45.00 | $40.00 | $40.00 |
Please answer the following questions:
2) How much was the flexible budget variance for sales revenue?
3) How much was the flexible budget variance for Contribution Margin?
4) How much was the flexible budget variance for Operating Income/(Loss)?
5) How much was the Static budget variance for Operating Income/(Loss)?
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