Bank Management Printers Inc. produces luxury checkbooks with three checks and s

Question

Bank Management Printers Inc. produces luxury checkbooks with three checks and stubs per page. Each checkbook is designe for an individual customer and is ordered through the customer's bank. The company's operating budget for September 2015 inclues these data:
Number of Checkbooks: 15,000
Selling Price per book: $20
Variable cost per book: $8
Fixed costs for the month: $145,000

The actual results for September 2015 were as follows:
Number of Checkbooks: 12,000
Selling Price per book: $21
Variable cost per book: $7
Fixed costs for the month: $150,000

1. Prepare a static-budget based variance analysis of the September performance
2. Prepare a flexible budget based variance analysis of the September performance
3. Why might Bank Management find the flexible budget based variance analysis ore informatice than the static budget based variance analysis?

Explanation / Answer

Static Budget

(20,000 untis)

Actual

(12,000)

Flexible budget variance

Since flexible budget variance isnt static , it makes use of actual units at standard cost for copmarision purpose.

Static Budget

(20,000 untis)

Actual

(12,000)

Variance Selling price (15,000*20) 300,000 252,000 48,000(U) less:Variable cost 120,000 84,000 36,000(f) Contribution 180,000 168,000 12,000(U) less:fixed cost (145,000) (150,000) 5,000(U) net income 35,000 18,000 17,000(U)

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