Four Flags is a retail department store. On January 1, 2014, Four Flags\' accoun
ID: 2478905 • Letter: F
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
$5.80
$215,000
$0.80
$190,000
$0.20
$140,000
$0.30
$110,000
$0.10
$66,000
$0.03
Expected unit sales in 2014 were 1,300,000, and 2014 total revenue was expected to be $13,000,000. 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):
Credit and Collection Expense:
Selling and Promotion Expense :
Fixed
Variable (per unit sold)
Cost of Goods Sold$0
$5.80
Selling and Promotion Expense$215,000
$0.80
Building Occupancy Expense$190,000
$0.20
Buying Expense$140,000
$0.30
Delivery Expense$110,000
$0.10
Credit and Collection Expense$66,000
$0.03
Explanation / Answer
Units in budget = 13,00,000
Actual units = 10,00,000
ratio comes 1300000 / 1000000 = 1.3 times of budget
Actual Budget 1.3*budget amount(flexible budget)
Flexible budget variance = flexible budget - actual amount
Selling and Promotion Expense = 279500 - 900000 = $ -620500 ( unfavourable)
Credit and Collection Expense = 85800 - 25000 = $60800 (favourable)
Selling and Promotion Expense 900000 215000 279500 Credit and Collection Expense 25000 66000 85800Related Questions
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