Top managers of Marshall Industries predicted 2018 sales of 14,800 units of its

Question

Top managers of Marshall Industries predicted 2018 sales of 14,800 units of its product at a unit price of $9.50. Actual sales for the year were 14,600 units at $12 each. Variable costs were budgeted at 2.00 per unit and actual variable cost were $2.10 per unit. Actual fixed cost of 48,000 exceeded budget it fixed cost by 4,000.

Prepare a flexible budget performance report for the year. First,complete the flexible budget performance report through the contribution margin line, then complete the report through the operating income line. Finally compute the total variances.

Flexible hudget Perlormance Report For the Year Ended December 31, 2018 2 3 5 Budget Amounts Actual Per Unit Results Flexible Budget Variance Sales Volume Variance Flexible Static Budget Budget Units Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income What variance contributed most to the years favorable resuits? What caused this variance? The variance contributing most to the years excellent results is the favorable

Explanation / Answer

31040 F -1500U

29540 F

B)the variance contributes most to year excellent result is the favorable Flexible budget variance

Budget amount per unit Actual result Flexible budget variance Flexible budget sales volume variance static budget units 14600 14600 14800 sales revenue 9.5 14600*12= 175200 36500 F 14600*9.5=138700 1900 U 140600 variable cost (2) (30660)   [14600*2.1] 1460 U (29200)    [14600*2] 400 F (29600) contribution margin 144540 35040 F 109500 1500 U 111000 Fixed cost (48000) 4000U (44000)        [48000-4000] 0 NA (44000) operating income 96540 31040 F 65500 1500 U 67000 96540-65500 67000-65500 31040 F 1500 U

31040 F -1500U

29540 F

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