Sales Flexible budget: $960,000 actual results: $972,000 Variable costs Flexible

Question

Sales Flexible budget: $960,000 actual results: $972,000 Variable costs Flexible budget: $192,000 actual results: $240,000 Contribution margin Flexible budget: 768000 Actual results: 732000 Fixed costs flexible budget: 500000 actual results: 490000 Net income Flexible budget: 268000 actual results: 242,000 What is the variable cost variance and is it favorable or unfavorable? Sales Flexible budget: $960,000 actual results: $972,000 Variable costs Flexible budget: $192,000 actual results: $240,000 Contribution margin Flexible budget: 768000 Actual results: 732000 Fixed costs flexible budget: 500000 actual results: 490000 Net income Flexible budget: 268000 actual results: 242,000 What is the variable cost variance and is it favorable or unfavorable? Flexible budget: $960,000 actual results: $972,000 Variable costs Flexible budget: $192,000 actual results: $240,000 Contribution margin Flexible budget: 768000 Actual results: 732000 Fixed costs flexible budget: 500000 actual results: 490000 Net income Flexible budget: 268000 actual results: 242,000 What is the variable cost variance and is it favorable or unfavorable?

Explanation / Answer

Sales has a favorable variable cost variance, since actual results exceeded flexible budget.

Same time, however Variable costs's actual results have exceeded flexible budget and hence unfavourable.

But since sales appeared pretty good in actual results the contribution margin is again favourable.

Overall if one sees, the income is more in actual results hence favourable.

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