Madison, Inc. wishes to evaluate, in summary fashion, its financial performance
ID: 2461959 • Letter: M
Question
Madison, Inc. wishes to evaluate, in summary fashion, its financial performance for the most recent period. Budgeted and actual operating results for this period are presented below:
What was the actual operating income for the period? What is the firm's master budget operating income? What was the flexible-budget operating income for the period? What is the total operating-income variance of the period? What was the sales-volume variance, in terms of operating income, for the period?
master budget actual results units sold 40,000 36,000 sales $2,000,000 $1,900,000 variable costs $1,200,000 $1,152,000 fixed costs $600,000 $600,000Explanation / Answer
Actual Operating Income= Total Revenue - Total Cost= 19,00,000 - 17,52,000= $1,48,000
Actual Revenue = 19,00,000
Actual Total Cost = Variable Cost + Fixed Cost = 1152000 + 600000= 17,52,000
Master Budget Operating Income= Total Budgeted Revenue - Total Budgeted Cost = 20,00,000 - 18,00,000 = 2,00,000
Total Budgeted Revenue =20,00,000
Total Cost = Variable cost + Fixed Cost = 12,00,000 + 6,00,000 =18,00,000
Flexible-budget operating income =
Budgeted Sales per unit = $50
Budgeted Variable Cost Per unit =$30
Budgeted Fixed Cost = $ 6,00,000
Budgeted Sales Per Unit * Actual Units = 50 * 36,000 = 18,00,000......1
Budgeted Variable Cost Per Unit * Actual Units= 30 * 36,000 = 10,80,000......2
Subtracting 1-2
Contribution Margin = 18,00,000-10,80,000 = 7,20,000
Contribution Margin - Fixed Cost = 7,20,000 - 6,00,000 = 1,20,000
Flexible-budget operating income= $1,20,000
Opertaing Income Variance = Actual Operating Income - Budgeted Operating Income
= $1,48,000 - $2,00,000 = -52,000
Sales Volume Variance = (Actual Units - Budgeted Units) * Budgeted Sales Prices per unit
= (36,000 - 40,000) * 30 = - 1,20,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.