RTI Company’s master budget calls for production and sale of 19,200 units for $9
ID: 2484973 • Letter: R
Question
RTI Company’s master budget calls for production and sale of 19,200 units for $96,000; variable costs of $42,240; and fixed costs of $21,200. During the most recent period, the company incurred $33,200 of variable costs to produce and sell 21,200 units for $86,200. During this same period, the company earned $26,200 of operating income. (Do not round intermediate calculations. Round final answer to the nearest whole dollar.)
Required: 1. Determine the following for RTI Company: a. Flexible-budget operating income. b. Flexible-budget variance, in terms of contribution margin. c. Flexible-budget variance, in terms of operating income. d. Sales volume variance, in terms of contribution margin. e. Sales volume variance, in terms of operating income.
Explanation / Answer
We have provided with the information as follow
(a )
. Flexible-budget operating income is $ 38,160
working notes for the above answer is as follow
(b)
Flexible-budget variance, in terms of contribution margin
b Contribution margin FB variance = actual CM flexible budget contribution margin
=53000-59360
=6360 Unfavrable
c. Flexible-budget variance, in terms of operating income.
Operating income FB variance = actual operating income FB operating income
=26200-38160
=11960 unfavrable
d. Sales volume variance, in terms of contribution margin.
Sales volume variance, in terms of contribution margin = FB contribution margin Master budget contribution margin
=59360-53760
=5600 Favorable
e. Sales volume variance, in terms of operating income.
Sales volume variance, in terms of operating income = FB operating income Master budget operating income
=38160-32560
=5600 Favorable
Budget Actual UnitProduce Total Per unit Unit
Produce Total Per unit sale 19200 96000 5 21200 86200 4.066038 Less: Variable cost 19200 42240 2.2 21200 33200 1.566038 Contribution 19200 53760 2.8 21200 53000 2.5 Less: Fixed Cost 19200 21200 1.104167 21200 26800 0.791045 Operating income 19200 32560 1.695833 21200 26200 1.235849
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.