The following information is available for Brownstone Products Company for the m
ID: 2467487 • Letter: T
Question
The following information is available for Brownstone Products Company for the month of July:
Compute the July sales volume variance and the flexible-budget variance for the month in terms of both contribution margin and operating income. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. )
Actual Master Budget Units 3,800 4,000 Sales revenue $53,600 $60,000 Variable manufacturing costs 19,400 16,000 Fixed manufacturing costs 14,300 13,300 Variable selling and administrative expenses 8,100 8,000 Fixed selling and administrative expenses 9,500 9,400Explanation / Answer
Brownstone Products Company All Amounts in $ 1. Sales Volume Variance = (Standard Quantity Sold - Actual Quantity Sold) X Actual price per unit =(4,000 - 3,800) X ($ 53,600 / 3,800) = 2821 U 2. Flexible Budget Variance Actual Master Budget Flexible Budget Units 3,800 4,000 3,800 Sales revenue 53,600 60,000 57,000 Variable manufacturing costs 19,400 16,000 15,200 Fixed manufacturing costs 14,300 13,300 13,300 Variable selling and administrative expenses 8,100 8,000 7,600 Fixed selling and administrative expenses 9,500 9,400 9,400 Flexible Budget Variance Sales -3,400 U Variable Manufacturing Costs 4,200 U Variable Selling Expenses 500 4,700 U Contribution Margin -8,100 U Fixed Manufacturing Costs 1000 U Fixed Selling Expenses 100 1100 U Net Operating Income -9,200
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