Quindo Table Company manufactures tables for schools. The 2015 operating budget

Question

Quindo Table Company manufactures tables for schools. The 2015 operating budget is based on sales of 44,000 units at $55 per table. Operating income is anticipated to be $220,000. Budgeted variable costs are $35 per unit, while fixed costs total $660,000. Actual income for 2015 was a surprising $477,000 on actual sales of 46,000 units at $57 each. Actual variable costs were $33 per unit and fixed costs totaled $627,000. Required: Prepare a variance analysis report with both flexible-budget and sales-volume variances. Quindo Table Company Variance Analysis Flexible Variances Volume Actual Results Flexible Budget Variances Sales-Static Units soldA) B) C) D) Sales F) G) H) Variable K) L) M) costs O) Contribution margin Fixed costsU) Operating T) 660.000 660,000 W) X) Y) z) $220.000 ncome

Explanation / Answer

Prepare Variance Analysis :

Actual Results Flexible variances Flexible budget Volume variances Sales static Unit sold 46000 46000 44000 Sales 2622000 92000 F 2530000 110000 F 2420000 Variable costs 1518000 92000 F 1610000 70000 U 1540000 Contribution margin 1104000 184000 F 920000 40000 F 880000 Fixed cost 627000 33000 F 660000 None 660000 Operating income 477000 217000 F 260000 40000 F 220000

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