Prepare a flexible budget for May

Calculate Pharoahs static budget variance for May

Pharoah Manufacturing produces ceiling fans. A master budget was prepared by the controller based on sales of 21,200 fans for the month of May. The budgeted income statement for the period follows: Budgeted Income Statement Revenue $4,833,600 Variable expenses Direct materials $1,314,400 Direct labor 784,400 Variable overhead 996,400 Total variable expenses 3,095,200 Contribution margin 1,738,400 Fixed overhead 360,400 Fixed selling and administrative expenses 697,200 Total fixed expenses 1,057,600 Operating income $680,800 During May, Pharoah produced and sold 24,900 fans and had the following actual results: During May, Pharoah produced and sold 24,900 fans and had the following actual results: Actual Income Statement Revenue $5,658,100 Variable expenses Direct materials $1,535,600 Direct labor 935.400 Variable overhead 1,179,300 Total variable expenses 3,650,300 Contribution margin 2,007,800 Fixed overhead 373,500 Fixed selling and administrative expenses 697,200 Total fixed expenses 1,070,700 Operating income $937,100