Using flexible budgets The following summary data are from a performance report

Question

Using flexible budgets

The following summary data are from a performance report for Hyland company for June, during which 9,600 units were produced. The budget reflects the company's normal capacity of 10,000units and use the info to answer A and B in an excel spreadsheet format.

r 11 Flexible Budgets, Segment Reporting, and Performance Analysis Budget Actual Costs (10,000 Units) (9,600 Units) Variances $105,000 210,000 72,000 54,000 $102,600 207,900 73,800 54,300 $438,600 $2.400 F 2,100F 1,800U 300 u $2.400F Fixed overhead.. Total a. What is the general implication of the performance report? Why might Hyland question the sig- b. Revise the performance report using flexible budgeting and comment on the general implicain de- nificance of the report? of the revised report. 22 Assiqning Trocnble ived Exnenses Selected data for Colony Company, which operates

Explanation / Answer

1) a performance report is a management report where the acutal revenues&costs for a period are compared with budgeted revenue&costs based on actual sales volume.Basically it comapares actual reaults with budgeted performance of actual sales voume i.e compare flexible budget with actual budget

in the presen report hyland budget is of 10,000 units but the acutal result is 9,600 unit ,both cannot be compared,therefore hyland is questioning the report

the budget is to be made for actual results i.e for 9,600 units for comparison

2)

AS you can see all actual result deviate or are unfavourable form the flexible budget

Budget Units 10000 9600 Direct material 105000 100800 Direct labor 210000 201600 Variable overhead 72000 69120 fixed overhead 54000 51840 441000 423360 Budgeted Actual Variances Units 9600 9600 Direct material 100800 102600 1800 U Direct labor 201600 207900 6300 U Variable overhead 69120 73800 4680 U fixed overhead 51840 54300 2460 U Total 423360 438600

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