You are given the following static budget report: Budget Actual Variance Unit Sa
ID: 2436912 • Letter: Y
Question
You are given the following static budget report:
Budget Actual Variance
Unit Sales 10,000 15,000 5,000 F
Variable Expenses:
Commissions $30,000 $33,000 $3,000 U
Advertising $1,000 $1,200 $200 U
Travel $10,000 $11,000 $1,000 U
Samples $2,500 $2,300 $200 F
Total Variable $43,500 47,500 $4,000 U
Fixed Expenses
Rent $5,000 $5,000 0
Salaries – Sales $2,000 $2,000 0
Salaries – Office $1,200 $1,200 0
Depreciation $1,500 $1,500 0
Total Fixed $9,700 $9,700 0
Total Expenses $53,200 $57,200 $4,000 U
Prepare a flexible budget analysis and explain whether you believe that costs were controlled. How do the results of the flexible budget differ from the results of the static budget?
Explanation / Answer
**Since the flexible budget variance is favorable ($ 17750) cost is controlled.
unit sales 15000 0 15000 5000 F 10000 variable expense commission 33000 12000 F 45000 [30000*15000/10000] 15000 U 30000 Advertising 1200 300 F 1500 [1000*15000/10000] 500 U 1000 Travel 11000 4000 F 15000 [10000*15000/10000] 5000 U 10000 samples 2300 1450 F 3750 [2500*15000/10000] 1250 U 2500 Total variable cost 47500 17750 F 65250 21750 U 43500 Fixed cost Rent 5000 0 NA 5000 0NA 5000 salaries -sales 2000 0 NA 2000 0 NA 2000 salaries -office 1200 0 NA 1200 0NA 1200 Depreciation 1500 0 NA 1500 0 NA 1500 Total fixed cost 9700 0 NA 9700 0 NA 9700 Total expense 57200 17750 F 74950 21750 U 53200Related Questions
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