Question
Requirements 4 and 5. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) Management would like to
Requirements 4 and 5. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) Management would like to determine the portion of the master budget variance that is (a) due to volume being different than originally anticipated, and (b) due to some other unexpected cause. Prepare a flexible budget performance report to address these questions, using the actual sales volume of
59,500
units and the budgeted sales volume of
56,000
units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from
51,000
to
64,500
units.
Begin by completing the actual and master budget columns of the performance report and then the master budget variances. Then compute the flexible budget column and the remaining variance columns. (Round all amounts to the nearest whole dollar. Label each variance as favorable (F) or unfavorable (U). If the variance is 0, make sure to enter in a "0". A variance of zero is considered favorable.)
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