The Blowing Balloon Company produces party balloons that are sold in multi-pack cases. To follow is the company's performance report in contribution margin format for January: Click the icon to view the performance report in contribution margin format) Read the requirements. Requirement 1. What is the budgeted sales price per unit? The budgeted sales price per unit is Requirement 2. What is the budgeted variable expense per unit? The budgeted variable expense per unit is Requirement 3. What is the budgeted fixed cost for the period? The budgeted foved cost for the period is 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 61,000 units and the budgeted sales volume of 59,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 54,000 to 66,000 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. Label each variance as favorable (F) or unfavorable (U). If the variance is 0, make sure to enter in a 'o'. A variance of zero is considered favorable.) The Blowing Balloon Company Flexible Budget Performance Report For the Month Ended January 31 Flexible Budget Flexible Volume Variance Budget Variance Master Budget Master Budget Variance Actual OOL Sales volume Sales revenue Less: Variable expenses Contribution margin Less: Fbad expenses Operating income Requirement a. Using the flexible budget performance report you prepared for Requirements, answer the following question: How much of the master budget variance (calculated in Requirement 4) for operating income is due to volume being higher than expected? The amount of the master budget variance for operating income due to volume being higher than expected is Requirement 65. Using the flexible budget performance report you prepared for Requirement 5 answer the following question: How much of the master budget variance for variable experses is due to some cause other than volume? The amount of the master budget variance for variable expenses due to some cause other than volume is Requirement &c. Using the flexible budget performance report you prepared for Requirement 5, answer the following question: What could account for the flexible budget variance for sales revenue? could account for the flexible budget variance for sales revenue. Requirement ed. Using the flexible budget performance report you prepared for Requirement 5 answer the following question: What is the volume variance for fixed expenses? Why is it this amount? (Enter a "O" for any zero amounts.) because the flexible budget uses the amount for fixed The volume variance for fixed expenses is expenses because forced expenses are 1. What is the budgeted sales price per unit? 2. What is the budgeted variable expense per unit? 3. What is the budgeted fixed cost for the period? 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 61,000 units and the budgeted sales volume of 59,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 54,000 to 66,000 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? 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? C. A B D 1 N The Blowing Balloon Company Actual vs. Budget Performance Report For the Month Ended January 31 3 Master Budget Variance Master 4 Actual Budget 5 Sales volume (number of cases sold) 61,000 59,000 6 Sales revenue $ 175,400 $ 153,400 7 Less: Variable expenses 74,900 64,900 8 Contribution margin $ 100,500 $ 88,500 9 Less: Fixed expenses 68,300 67,000 10 Operating income $ 32,200 $ 21,500