E23-16: Preparing a flexible budget performance report Cole Pro Company managers
ID: 2426944 • Letter: E
Question
E23-16: Preparing a flexible budget performance report
Cole Pro Company managers received the following incomplete performance report:
Cole Pro Company
Flexible Budget Performance Report
For the year ended July 31, 2016
Complete the performance report. Identify the employee group that may deserve praise and the group that may be subject to criticism. Give your reasoning.
Please list the step by step process. Thank you!
Cole Pro Company
Flexible Budget Performance Report
For the year ended July 31, 2016
Actual results Flexible budget variance Flexible Budget Sales Volume Variance Static Budget Units 39,000 (a) 39,000 8,000 F (g) Sales revenue $214,000 (b) $214,000 $19,000 F (h) Variable Expenses 86,000 (c) 80,000 8,000 U (i) Contribution Margin 128,000 (d) 134,000 11,000 F (j) Fixed Expenses 108,000 (e) 103,000 0 (k) Operating Income 20,000 (f) 31,000 11,000 (l)Explanation / Answer
Missing information shown as under:
Cole Pro Company Flexible budget Performance Report
For the year ended July 31, 2016
Actual results
Flexible budget variance
Flexible Budget
Sales Volume Variance
Static Budget
Units
39,000
(a)
39,000
8,000F
(g)= 30,000
Sales revenue
$214,000
(b)
$214,000
$19,000F
(h)= 195,000
Variable Expenses
86,000
(c)
80,000
$8,000F
(i)78,000
Contribution Margin
128,000
(d)
134,000
$11,000F
(j)117,000
Fixed Expenses
108,000
(e)
103,000
0
(k)108,000
Operating Income
20,000
(f)
31,000
$11,000F
(l)9,000
Flexible budget Variance is the difference between flexible budget and actual results.
Points (a) to (f) are calculated as under:
Static budget is calculated on the basis of actual results and sales volume variance.
Cole Pro Company Flexible budget Performance Report
For the year ended July 31, 2016
Actual results
Flexible budget variance
Flexible Budget
Sales Volume Variance
Static Budget
Units
39,000
(a)
39,000
8,000F
(g)= 30,000
Sales revenue
$214,000
(b)
$214,000
$19,000F
(h)= 195,000
Variable Expenses
86,000
(c)
80,000
$8,000F
(i)78,000
Contribution Margin
128,000
(d)
134,000
$11,000F
(j)117,000
Fixed Expenses
108,000
(e)
103,000
0
(k)108,000
Operating Income
20,000
(f)
31,000
$11,000F
(l)9,000
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