- x Requirements 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 54,000 units and the budgeted sales volume of 52,000 units. Use the original budget assumptions for sales price, variable cost per unit, and fixed costs, assuming the relevant range stretches from 47,000 to 64,000 units. 6. Using the flexible budget performance report you prepared for Requirement 5, answer the following questions: 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? a. c. Print Done The Great Balloon Company Flexible Budget Performance Report For the Month Ended October 31 Flexible Master Budget Flexible Volume Master Budget Actual Variance Budget Variance Budget Variance 54000 52000 2000 Sales volume F Sales revenue 198800 176800 22000 F 83800 Less: Variable expenses 72800 11000 U Contribution margin 115000 104000 11000 F 71800 Less: Fixed expenses 70000 1800 U 43200 34000 Operating income 9200 F