Four Flags is a retail department store. On January 1, 2014, Four Flags\' accoun

Question

Four Flags is a retail department store. On January 1, 2014, Four Flags' accountants used the following data to develop the master budget for Four Flags for 2014:

Fixed

Variable (per unit sold)

$0

$6.60

$200,000

$0.80

$190,000

$0.20

$145,000

$0.40

$100,000

$0.10

$74,000

$0.03

Expected unit sales in 2014 were 1,200,000, and 2014 total revenue was expected to be $12,000,000. Actual 2014 unit sales turned out to be 1,000,000, and total revenue was $10,000,000. Actual total costs in 2014 were:

Required
Compute the flexible-budget variances for the following two cost items (NOTE: enter favorable variances as positive numbers and unfavorable variances as negative numbers):

  Selling and Promotion Expense:______

  Building Occupancy Expense :______

Cost

Fixed

Variable (per unit sold)

Cost of Goods Sold

$0

$6.60

Selling and Promotion Expense

$200,000

$0.80

Building Occupancy Expense

$190,000

$0.20

Buying Expense

$145,000

$0.40

Delivery Expense

$100,000

$0.10

Credit and Collection Expense

$74,000

$0.03

Explanation / Answer

Four Flags is a retail department store. On January 1, 2014, Four Flags' accoun

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