Printers Inc. produces luxury chequebooks with three cheques and stubs per page. Each chequebook is designed for an individual customer and is ordered through the? customer's bank. The? company's operating budget for September included these? data:

The budgeted amounts for September? were:

 

Number of chequebooks	20,000
Selling price per book	$21
Variable costs per book	$9
Total fixed costs for the month	$150,000

 

The actual results for September? were:

 

Number of chequebooks produced and sold	14,250
Average selling price per book	$25.80
Variable costs per book	$8
Total fixed costs for the month	$153,500

The executive vice president of the company observed that the operating income for September was much less than? anticipated, despite a? higher-than-budgeted selling price and a? lower-than-budgeted variable cost per unit. You have been asked to provide explanations for the disappointing September results.

Cheque MateCheque Mate

develops its? flexible-budget-based budgeted revenue per output unit and variable costs per output unit without a detailed analysis of budgeted inputs.

 

Part 1

 

Requirement 1.  Level 1 analysis of the September performance.

 

Begin with the actual? results, and then compute the static budget and the? static-budget variances. Label each variance as favourable or unfavourable.? (For variances with a? $0 balance, make sure to enter? "0" in the appropriate field. If the variance is? zero, do not select a label. Enter an operating loss with a minus sign or? parentheses.)

 

	Actual Results	Static-Budget Variances	Static Budget
Units sold	14,250			20,000
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income

 

Part 2

 

Requirement 2.  Level 2 analysis of the September performance.

 

Begin with the actual? results, and then complete the flexible budget columns and the static budget columns. Label each variance as favourable or unfavourable.? (For variances with a? $0 balance, make sure to enter? "0" in the appropriate field. If the variance is? zero, do not select a label. Enter operating losses with a minus sign or? parentheses.)

 

	Actual Results	Flexible-Budget Variances	Flexible Budget	Sales-Volume Variances	Static Budget
Units sold	14,250						20,000
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income

 

Part 3

 

Requirement 3. Why might

Cheque MateCheque Mate

find the Level 2 analysis more informative than the Level 1? analysis?

 

Level 2 _________(breaksdown/takes a higher look at) the? static-budget variance. This allows the managers to see the portion of the variance that arose because sales price and costs were either higher or lower than? expected, as shown in the ________(flexible budget variance/sale volume variance) column, and the portion of the variance that arose because the sales volume was different than? expected, as shown in the ________(flexible-budget variance/sales volume variance)column.