Timberlake Company planned for a production and sales volume of 12,000 units. Ho
ID: 2405819 • Letter: T
Question
Timberlake Company planned for a production and sales volume of 12,000 units. However, the company actually makes and sells 13,000 units Per unit standards Static Budget Flexible Budget Number of units Sales revenue Variable manufacturing costs: 12,000 13,000 $65.00 $780,000 $845,000 Materials Labor Overhead Variable general, selling, and $11.00 9.00 4.20 132,000 108,000 50,400 143,000 117,000 54,600 132,000 $357,600 143,000 $387,400 administrative costs $11.00 Contribution margin Fixed costs Manufacturing overhead General, selling, and administrative 100,800 100,800 45,000 $211,800 45,000 $241,600 costs Net income What was the sales volume variance?Explanation / Answer
ANSWER Static Budget refers to the budget which are planned by the organisation regarding the future whereas Flexible Budget Refers to the budget that actually happens ( actual result ) of the organisation.
Static sales units are planned and actual sales units are real so to avoid the mismatch we make flexible budget on the basis of actual result ( sale units ) . Now we have to As Actual Sales unit and Flexible Budget Unit are same so we donot have to make the Flexilble Budget Again
We know
Sales Volume Variance = Static Operating Income - Flexible Operating Income
= $ 211800 - $ 241600
= $ 29800 Unfavourable
C option is correct
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