Dunlop Company has provided the following 2018 data Budget Sales Variable produc

Question

Dunlop Company has provided the following 2018 data Budget Sales Variable product costs Variable selling expense Other variable expenses Fixed product costs Fixed selling expense Other fixed expenses Interest expense 400,000 163,000 40,000 3,000 10,500 20,000 1,600 650 Variances Sales Variable product costs Variable selling expense Other variable expenses Fixed product costs Fixed selling expense Other fixed expenses Interest expense 3,200 U 2,600 F 1,250 U 600 U 110 F 195 F 75 U 50 F Required a. & b. Prepare a budgeted and actual income statement for internal use. Separate operating income from net income in the statements. Calculate variances and identify them as favorable (F) or unfavorable (U) by comparing the budgeted and actual amounts determined. (Select "None" if there is no effect (i.e., zero variance).)

Explanation / Answer

Contribution margin in Variance Part should be $ 2450 (194000 - 191550) or ( 3200 -2600 + 1250+ 600)

Operating Income Should be $ 2230 i.e Contribution margin less fixed expenses ( 2450 - 110 - 195 + 75) or (161900 - 159680)

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