Success Systems’ second quarter 2014 fixed budget performance report for its com
ID: 2454388 • Letter: S
Question
Success Systems’ second quarter 2014 fixed budget performance report for its computer furniture operations follows. The $159,690 budgeted expenses include $106,400 in variable expenses for desks and $18,290 in variable expenses for chairs, as well as $35,000 fixed expenses. The actual expenses include $36,500 fixed expenses. List fixed and variable expenses separately.
Success Systems’ second quarter 2014 fixed budget performance report for its computer furniture operations follows. The $159,690 budgeted expenses include $106,400 in variable expenses for desks and $18,290 in variable expenses for chairs, as well as $35,000 fixed expenses. The actual expenses include $36,500 fixed expenses. List fixed and variable expenses separately.
Explanation / Answer
Answer:
Flexible Budget is prepared on the basis of Actual Result at standard cost.
SUCCESS SYSTEMS
Flexible Budget Performance Report
For Quarter Ended June 30
Particulars
Flexible Budget (Based on Actual Result)
Actual Result
Variance
Fav./Unf
$/Unit
Amount
Desk Sales (In Units)
146
146
Chair Sales (In Units)
67
67
Desk Sales
$1,350
197,100
$195,640
Chair Sales
$510
34170
$35,175
Total Sales (Desk + Chair)
$231,270
$230,815
$455
U
Variable Expenses (Note 2 & 4)
$131,730
$132,020
$290
U
Contribution Margin
$99,540
$98,795
$745
U
Fixed Expenses
$35,000
$36,500
$1,500
U
Income from Operations
$64,540
$62,295
$2,245
U
Note 1 : Calculation of Variable Expenses per Unit (Fixed Budget)
Particulars
Variable Expenses
Sales Unit
(Fixed Budget)
Variable Expenses
per Unit
Desk
$106,400
140
$106,400 / 140 = $760
Chair
$18,290
59
$18,290 / 59 = $310
Total Variable Expenses
$124,690
Fixed Expenses
$35,000
Total Expenses
$159,690
Note 2: Calculation of Variable Expenses for Flexible Budget based on Actual Result
Particulars
Sales Unit
(Based on Actual Result)
Variable Expenses
per Unit (as calculated above)
Variable Expenses (Sales Unit x Variable Expenses per unit)
Desk
146
$760
$110,960
Chair
67
$310
$20,770
Total Variable Expenses
$131,730
Fixed Expenses
$35,000
Total Expenses
$166,730
Note 3: Calculation of Selling Price Per Unit (Fixed Budget)
Sale Price Per Unit for Desk = $189,000 / 140 = $1,350
Sale Price Per Unit for Chair = $30,090 / 59 = $510
Note4: Variable Expenses for Actual Result
Total Expenses = Variable Expenses + Fixed Expenses
$168,520 = Variable Expenses + $36,500
Variable Expenses = $168,520 - $36,500 = $132,020
SUCCESS SYSTEMS
Flexible Budget Performance Report
For Quarter Ended June 30
Particulars
Flexible Budget (Based on Actual Result)
Actual Result
Variance
Fav./Unf
$/Unit
Amount
Desk Sales (In Units)
146
146
Chair Sales (In Units)
67
67
Desk Sales
$1,350
197,100
$195,640
Chair Sales
$510
34170
$35,175
Total Sales (Desk + Chair)
$231,270
$230,815
$455
U
Variable Expenses (Note 2 & 4)
$131,730
$132,020
$290
U
Contribution Margin
$99,540
$98,795
$745
U
Fixed Expenses
$35,000
$36,500
$1,500
U
Income from Operations
$64,540
$62,295
$2,245
U
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