Dropdown box window with choices of Flexible budget variance, Sales volume varia

Question

Dropdown box window with choices of Flexible budget variance, Sales volume variance, Static budget variance.

1 Requirements July 1. Prepare a flexible budget performance report for 2. What was the effect on Cell One's operating income of selling 2,000 units more than the static budget level of sales? 3. What is Cell One's static budget variance for operating income? 4. Explain why the flexible budget performance report provides more useful information to Cell One's managers than the simple static budget variance. What insights can Cell One's managers draw from this performance report?

Explanation / Answer

Static Budget variance

24400 F

[48400-24000]

Actual Flexible Budget contribution margin 103900 1900F 102000 102000 24000F 78000 fixed expense 55500 1500U 54000 54000 0 54000 operating income 48400 400F 48000 48000 24000F 24000 Flexible budget variance Sales volume variance 48400-48000= 400 F 24000 F

Static Budget variance

24400 F

[48400-24000]

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