Find the values of the missing items. Assume that the actual sales volume equals
ID: 2519699 • Letter: F
Question
Find the values of the missing items. Assume that the actual sales volume equals actual production volume. (There are no inventory level changes.) (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Reported Income Statement (2,500 units) Flexible Sales Price Budget Sales Activity (2,500 units) Master Budget Marketing and Manufacturing Administrative Variance Variance ance (2,600 units) Variance $ 122,500 $ 130,000 Sales revenue Variable manufacturing costs Variable marketing and administrative costs Contribution margin 4,000 F 1,530 F 15,600 $75,850Explanation / Answer
Flexible budget is the budget prepared at standard selling price or cost using the actual activity level achieved.
Master Budget is the budget prepared by the company at the planned activity at the beginning of the period.
From flexible budget we can find out the standard price.
Unit Selling Price as per Flexible Budget = Total Sales Revenue $130,000 / Activity Level 2,500 Units
= $52 per unit
Sales Revenue of Master Budget = 2,600 Units x Standard Unit Selling Price $52 = $135,200
Sales Activity Variance is the difference between Master Budget and Flexible Budget.
Variable Manufacturing Cost Sales Activity Variance = $1,530 F
Std Rate (2,600 – 2,500) = $1,530
Std Rate = $1,530 / 100 Units = $15.30
Master Budget figure for Variable Manufacturing Costs = 2600 Units x $15.30 = $39,780
Flexible Budget figure for Variable Manufacturing Costs = 2500 Units x $15.30 = $38,250
Reported Income Statement (2,500 Units)
Manufacturing Variance
Marketing and Administrative Variance
Sales Price Variance
Flexible Budget (2,500 Units)
Sales Activity Variance
Master Budget (2,600 Units)
Sales Revenue
$122,500
$7,500
U
$130,000
$5,200
U
$135,200
Variable manufacturing costs
$34,250
$4,000
F
$38,250
$1,530
F
$39,780
Variable marketing and administrative costs
$12,400
$2,600
F
$15,000
$600
F
$15,600
Contribution Margin
$75,850
$4,000
F
$2,600
F
$7,500
U
$183,250
$7,330
U
$190,580
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Reported Income Statement (2,500 Units)
Manufacturing Variance
Marketing and Administrative Variance
Sales Price Variance
Flexible Budget (2,500 Units)
Sales Activity Variance
Master Budget (2,600 Units)
Sales Revenue
$122,500
$7,500
U
$130,000
$5,200
U
$135,200
Variable manufacturing costs
$34,250
$4,000
F
$38,250
$1,530
F
$39,780
Variable marketing and administrative costs
$12,400
$2,600
F
$15,000
$600
F
$15,600
Contribution Margin
$75,850
$4,000
F
$2,600
F
$7,500
U
$183,250
$7,330
U
$190,580
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.