Question
Question 1: Patty, Inc. wishes to evaluate, in summary fashion, its financial performance for the most recent period. Budgeted and actual operating results for this
Question 1:
Patty, Inc. wishes to evaluate, in summary fashion, its financial performance for the most recent period. Budgeted and actual operating results for this period are presented below.
| Master Budget | Actual Results | ||||
Units sold |
| 40,000 |
|
| 36,000 |
|
Sales | $ | 2,000,000 |
| $ | 1,900,000 |
|
Variable costs | $ | 1,200,000 |
| $ | 1,152,000 |
|
Fixed costs | $ | 600,000 |
| $ | 660,000 |
|
Calculate (to the nearest dollar): Indicate favorable / unfavorable variances and the meaning of the variance:
1. What is the flexible-budget operating income for the period?
2. What is the total operating-income variance of the period?
3. What is the sales-volume variance, in terms of operating income, for the period?
4. What is the flexible budget variance, in terms of operating income, for the period?
Please explain and show work. Will rate.
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