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 58,000 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 63,000 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. For accounts with a 0 balance, make sure to enter "0" in the appropriate column. Label each variance as favorable (F) or unfavorable (U).) The Precious Balloon Company Flexible Budget Performance Report For the Month Ended March 31 Flexible Budget Flexible Volume Variance Budget Variance -N Master Master Budget Actual Variance Budget _ 21000 Sales volume Sales revenue Less: Variable expenses Contribution margin OOOOOO Less: Fixed expenses Operating income Choose from any list or enter any number in the input fields and then click Check Answer. The Precious Balloon Company Actual vs. Budget Performance Report For the Month Ended March 31 4. Compute the master budget variances. Be sure to indicate each variance as favorable (F) or unfavorable (U.) 5. 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 58,000 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 63,000 units. 6. Using the flexible budget performance report you prepared for Requirement 5, answer the following questions: a. How much of the master budget variance (calculated in Requirement 4) for operating income is due to volume being higher than expected? b. How much of the master budget variance for variable expenses is due to some cause other than volume? c. What could account for the flexible budget variance for sales revenue? d. What is the volume variance for fixed expenses? Why is it this amount? Master Budget Master Budget Variance Actual Sales volume (number of cases sold) 58,000 56,000 Sales revenue $ 211,400 $ 72,100 190,400 61,600 Less: Variable expenses Contribution margin Print Done Less: Fixed expenses $ 139,300 $ 65,400 $ 73,900 $ 128,800 64,000 64,800 Operating income Less: Fixed expenses Operating income Print Done Choose from any list or enter any number in the input fields and then click Check
