Walcker Transportation Company's general manager reports quarterly to the company president on the firm's operating performance. The company uses a Although the general manager was upset about not obtaining enough revenue, she was happy that her cost performance was favorable; otherwise, her net budget based on detailed expectations for the forthcoming quarter. The general manager has just received the condensed quarterly performance report shown income would be even worse. The president was not satisfied with the performance report and remarked, "I can see some merit in comparing actual below. performance with budgeted performance because we can see whether actual revenue coincided with our best guess for budget purposes. But I can't see how this performance report helps me evaluate cost-control performance." (Click the icon to view the quarterly performance report.) Read the requirements. Requirement 1. Prepare a columnar flexible budget for Walcker Transportation at revenue levels of $12,600,000, $13,000,000, and $13,400,000. Assume that the prices and mix of products sold are equal to the budgeted prices and mix. Begin with the flexible budget at revenues of $12,600,000, next, complete the flexible budget at revenues of $13,000,000 and, then, prepare the flexible budget at revenues of $13,400,000. (Enter all costs as positive numbers.) Walcker Transportation Company X Flexible Budgets for Various Levels of Sales Data Table 2,600,000 $ 13,000,000 $ 13,400,000 Net revenue Variable Costs Budget Actual Variance Fuel 504,000 $ 520,000 $ 536,000 Net revenue $ 13,000,000 $ 12,700,000 $ 300,000 Repairs and maintenance 378,000 390,000 402,000 Variable Costs Supplies and miscellaneous 2,016,000 2,080,000 2,144,000 Fuel $ 520,000 $ 516,000 $ 4,000 F 7,812,000 8.060,000 8.308,000 Variable payroll Repairs and maintenance 390,000 398,000 8,000 U Total variable costs 10,710,000 $ 11,050,000 $ 11,390,000 Supplies and miscellaneous 2,080,000 2,070,000 10,000 F Fixed Costs Variable payroll 8,060,000 7,940,000 120,000 F Supervision 160,000 $ 160,000 $ 160,000 Total variable costs* $ 11,050,000 $ 10,924,000 $ 126,000 F Rent 200,000 200,000 200,000 Fixed Costs Depreciation 460,000 460,000 460,000 Supervision 160,000 $ 177,000 $ 17,000 U 170.000 170.000 170,000 Other fixed costs Rent 200,000 200,000 990,000 990,000 990,000 Total fixed costs Depreciation 460,000 460,000 Total fixed and variable costs 11,700,000 $ 12,040,000 $ 12,380,000 170,000 163.000 er fixed costs 7.000 F 900,000 $ 960,000 $ 1,020,000 Operating income Total fixed costs 990,000 1,000,000 10,000 U Requirement 2. Write out the flexible budget formula for costs as a function of revenue. (Enter any proportions in decimal form to two decimal places, .XX.) Total fixed and variable costs 12,040,000 $ 11,924,000 $ 116,000F 960,000 $ 776,000 $ 184,000 Cost x Revenue + Operating income U = Unfavorable. F = Favorable *For purposes of this analysis, assume that all these costs are totally variable with respect to sales revenue. In practice, many are mixed and have to be subdivided into Help Me Solve This Video Get More Help - variable and fixed components before a meaningful analysis can be made. Also, Clear All