Question
Requirement 1. Calculate all the required variances.(If your work isaccurate, you will find that the totalstatic-budget variance is$0.) Begin with the flexible budgetcolumns, then the
Requirement 1. Calculate all the required variances.(If your work isaccurate, you will find that the totalstatic-budget variance is$0.)
Begin with the flexible budgetcolumns, then the sales volume variance column. Label each variance as favorable(F) or unfavorable(U). (For variances with a$0 balance, make sure to enter"0" in the appropriate field. If the variance iszero, do not select a label. Round your answers to the nearest wholedollar.)
Actual
Flexible-Budget
Flexible
Results
Variance
Budget
Units sold
110,000
0
110,000
Revenues (sales)
$
687,500
$
220,000
F
$
467,500
Variable costs
435,000
160,000
U
275,000
Contribution margin
252,500
60,000
F
192,500
Fixed costs
203,000
88,000
U
115,000
Operating income
$
49,500
$
28,000
U
$
77,500
Sales-Volume
Static
Variance
Budget
16,000
F
94,000
$
68,000
F
$
399,500
40,000
U
235,000
28,000
F
164,500
0
115,000
$
28,000
F
$
49,500
Calculate the totalstatic-budget variance to verify your work is accurate. Determine the labels and then enter the amounts to calculate thestatic-budget variance. (For variances with a$0 balance, make sure to enter"0" in the appropriate field. If the variance iszero, do not select a label. Abbreviationused: CM= contributionmargin.)
Total flexible-budget variance
+
Total sales-volume variance
=
Total static-budget variance
$
28,000
U
+
$
28,000
F
=
$
0
Requirement 2. What are the actual and budgeted sellingprices? What are the actual and budgeted variable costs perunit? (Round your answers to the nearestcent.)
The actual selling price is $
6.25
per unit. The budgeted selling price is $
4.25
per unit.
The actual variable cost is $
3.95
per unit. The budgeted variable cost is $
2.50
per unit.
Requirement 3. Review the variances you have calculated and discuss possible causes and potential problems. What is the important lesson learnedhere?
Actual variable costs increased
, causinga(n) unfavorable
flexible-budget variable cost variance. This variance could be a result ofa(n) increase
in direct material prices.
(Round percentage to the nearest wholenumber.)
Utica was able to pass most of the change in direct material prices on to its customers. Actual selling price
increased
by approximately
%, bringing about an offsetting flexible-budget revenue variance.
How can I get Req 3 ?
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College Accounting A Contemporary Approach
Authors: David Haddock, John Price, Michael Farina
3rd edition
77639731, 978-0077639730
