E23-16 Preparing a flexible budget performance report Murphy Company managers re
ID: 2545849 • Letter: E
Question
E23-16 Preparing a flexible budget performance report Murphy Company managers received the following incomplete performance report MURPHY COMPANY Flexible Budget Performance Report For the Year Ended July 31, 2018 Flexible Sales Actual Budget Flexible Volume Static Results Variance Budget Variance Budget 35,000 5,000 F (g/ 35,000 (a) Units Sales Revenue Variable Expenses Contribution Margin Fixed Expenses Operating Income $219,000 (b) $219,000 $27,000 F (h) 85,000 () 134,000 (d) 135,000 14,000 F 0 105,000 (e) 100,000 29,000 () 35,000 $ 14,000 F (0 84,000 13,000 U ( Complete the performance report. Identify the employee group that may deserve praise and the group that may be subject to criticism. Give your reasoning E23-17 Preparing a flexible budget performance report Top managers of Marshall Industries predicted 2018 sales of 14,800 units of its prExplanation / Answer
The sales group deserves praise as they have achieved higher sales volume than budgeted which is reflected by favourable sales volume variance for sales units.
The group responsible for production andadministration deserves criticism as the actual variable expenses and fixed expenses have gone up in comparison to the budget amounts which is reflected by flexxible budget variance for variable costs (1,000 U) and flexible budget variance for fixed expenses (5,000 U).
(a) Actual units - Flexible units = 35000 - 35000 = 0 (b) Actula sales revenue - Flexible sales revenue = 219,000 - 219,000 = 0 (c) Actual variable expenses - flexible budget sales revenue = 85,000 - 84,000 = 1,000 U (d) Actual Contribution margin - Flexible budget contribution margin = 134,000 - 135,000 = 1,000 U (e) Actual Fixed Expenses - Flexible budget fixed expenses = 105,000 - 100,000 = 5,000 U (f) Actual Operating Income - Flexible budget operatin income = 29,000 - 35,000 = 6,000 U (g) Flexible budget units - Sales volume variance for units = 35,000 - 5 000 = 30,000 (h) Flexible budget sales revenue - Sales volume revenue variance = 219,000 - 27,000 = 192,000 (i) Flexible budget variable expenses - sales volume variable expense variance = 84,000 - 13,000 = 71,000 (j) Flexible budget contribution margin - sales volume contribution margin variance = 135,000 - 14,000 = 121,000 (k) Flexibel fixed expenses - sales volume fixed expense variance = 100,000 - 0 = 100,000 (l) Flexible budget operating income - sales volume operating income variance = 35,000 - 14,000 = 21,000 The peformance report will be as follows: MURPHY COMPANY Flexible Budget Performance Report For the year ended July 31, 2018 Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget Units 35000 0 35000 5000 F 30000 Sales Revenue 219000 0 219000 27000 F 192000 Variable Expenses 85000 1000 U 84000 13000 U 71000 Contribution Margin 134000 1000 U 135000 14000 U 121000 Fixed Expenses 105000 5000 U 100000 0 100000 Operating Income 29000 6000 U 35000 14000 F 21000Related Questions
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