Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The company created a flexible budgeted income statement to compare to actual results for the year. From the data provided, you will calculate variances for

image text in transcribed

The company created a flexible budgeted income statement to compare to actual results for the year. From the data provided, you will calculate variances for each income statement item, analyze why certain variances have occurred, and determine what the company can do going forward to mitigate each variance. Project Data: Project Requirements: $ Sales Revenue Cost of Goods Sold Gross Profit Flexible Budget 150,000 $ 90,000 60,000 $ Actual Results 135,000 81,000 54,000 1. Calculate the variance between the flexible budget and actual results for each income $ Expenses: Salaries Sales Commissions Rent Insurance Supplies Other Operating Total Expenses 35,000 3,000 12,000 4,000 400 1,100 55,500 35,000 2,700 12,000 4,000 300 800 54,800 statement item. 2. Determine whether each variance is favorable or unfavorable for the company. 3. Determine if a variance occurred for each of the following and provide a brief explanation for each variance: a. Sales Revenue $ $ b. Cost of Goods Sold Net Income $ 4,500 S (800) c. Total Expenses d. Net Income . 4. Provide a brief explanation on what the company can do going forward to mitigate each variance. The income statement above is for one product that the company sells to its customers. A customer will receive a 10% discount when they purchase 10 or more items in one transaction. Furthermore, two customers switched suppliers during the year and the company did not sell to any new customers. Cost of goods sold includes direct materials, direct labor, and manufacturing overhead, and is expensed when the product is sold. All expenses are period costs that are expensed in the period incurred. Sales commissions are 2% of sales revenue

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting And Finance For Non Specialists

Authors: Eddie McLaney, Peter Atrill

2nd Edition

0135717469, 9780135717462

More Books

Students also viewed these Accounting questions

Question

How many applicants are you interviewing?

Answered: 1 week ago

Question

How does or how might the key public affect your organization?

Answered: 1 week ago