XYZ Company\'s budgeted and actual results for last year are as follows: Require

ID: 2419205 • Letter: X

Question

XYZ Company's budgeted and actual results for last year are as follows:

Required:

(a) Compute budgeted and actual revenue, costs and profits:

In (b)-(d) below, enter favorable and unfavorable variances as positive and negative numbers, without F or U.

(b) How much is the total profit variance?
(enter negative numbers with a minus, i.e. enter negative $100 as -100 not ($100) ) $

(c) How much is the activity variance(=sales volume variance)?
(enter negative numbers with a minus) $

(d) How much is the revenue variance (=sales price variance)?
(enter negative numbers with a minus) $

Master budget Actual results Price $450 $650 Sales volume (units) 8,000 6,500 Unit VC $200 $200 Fixed costs $200,000 $200,000

Explanation / Answer

Particulars

Master budget

Actual

Selling Price

450

650

Sales volume (units)

8,000

6,500

Revenue

3,600,000

4,225,000

Variable costs @ 200 Per Unit

1,600,000

1,300,000

Contribution margin

2,000,000

2,925,000

Fixed costs

200,000

Profit

1,800,000

2,725,000

b) Total profit variance= Actual Profit- Budgeted Profit=

=$2,725,000-$1,800,0000=

=$925,000 F

---------------------------------------------------------------------

c)Sales volume variance = (Actual sales – Budget sales) × Budget price

=(6,500-8,000) x 450

=-1,500 x 450

=-$675,000 U

d) Sales price variance = (Actual price – Budget price) × Actual sales

=(650-450) x 6,500=

=200 x 6,500

=$1,300,000 F