*If you could please explain how you got your answers that would be great. (Ment
ID: 2488920 • Letter: #
Question
*If you could please explain how you got your answers that would be great. (Mention if its favorable, or unfavorable.)
Problem 6-27 (Part Level Submission) Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 158,100 board games. The budgeted income statement for the period is as follows. Sales Revenue $2,371,500 Variable expenses $664,020 268,770 411,060 Direct materials Direct labor Variable overhead Total variable expenses Contribution margin Fixed overhead Fixed selling and administrative expenses Total fixed expenses Operating income 1,343,850 1,027,650 251,200 507,500 758,700 $268,950 During November, Barnes produced and sold 186,500 board games. Actual results for the month are as follows. Sales Revenue $2,786,300 Variable expenses Direct materials $772,300 333,750 495,700 Direct labor Variable overhead Total variable expenses Contribution margin Fixed overhead Fixed selling and administrative expenses Total fixed expenses Operating income 1,601,750 1,184,550 275,500 507,500 783,000 $401,550 Prepare a flexible budget for November Calculate Barnes's static budget variance for November Based on the available information, prepare a performance report for management.Explanation / Answer
a) Budgeted per unit Actual Static budgeted /158100 Flexible per unit * 186500 Sales unit 158100 186500 Sales Revenue 2371500 15 2797500 Variable expenses Direct material 664020 4.2 783300 Direct labor 268770 1.7 317050 Variable overhead 411060 2.6 484900 Total variable expenses 1343850 8.5 1585250 Contribution margin 1027650 6.5 1212250 Fixed overhead 251200 251200 Fixed selling & administrative expenses 507500 507500 Total fixed expenses 758700 758700 Operating Income 268950 453550 b) Budgeted Actual Variance actual - budgeted Static Sales unit 158100 186500 28400 favourable Sales Revenue 2371500 2786300 414800 favourable Variable expenses Direct material 664020 772300 108280 unfavourable Direct labor 268770 333750 64980 unfavourable Variable overhead 411060 495700 84640 unfavourable Total variable expenses 1343850 1601750 257900 unfavourable Contribution margin 1027650 1184550 156900 unfavourable Fixed overhead 251200 275500 24300 unfavourable Fixed selling & administrative expenses 507500 507500 0 Total fixed expenses 758700 783000 24300 unfavourable Operating Income 268950 401550 132600 unfavourable d) Budgeted Actual Variance actual - budgeted flexible Sales unit 186500 186500 0 favourable Sales Revenue 2797500 2786300 -11200 unfavourable Variable expenses Direct material 783300 772300 -11000 favourable Direct labor 317050 333750 16700 unfavourable Variable overhead 484900 495700 10800 unfavourable Total variable expenses 1585250 1601750 16500 unfavourable Contribution margin 1212250 1184550 -27700 unfavourable Fixed overhead 251200 275500 24300 unfavourable Fixed selling & administrative expenses 507500 507500 0 Total fixed expenses 758700 783000 24300 unfavourable Operating Income 453550 401550 -52000 unfavourable The performance can be better compared if the actual is compared with the flexible budget Based on the above comparison , it has been derived that the company performance is not meeting the set standards Its revenue is lowe than budgeted and its expenses are more than the budget, leading to a shortfall in the operating income in comparison to the flexible budget
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