Quindo Table Company manufactures tables for schools. The 2015 operating budget
ID: 2564888 • Letter: Q
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
Actual Results
Flexible Variances
Flexible Budget
Volume Variances
Sales-Static
Units sold
B)
C)
D)
E)
Sales
F)
G)
H)
I)
J)
Variable costs
K)
L)
M)
N)
O)
Contribution margin
P)
Q)
R)
S)
T)
Fixed costs
U)
V)
660,000
0
660,000
Operating income
W)
X)
Y)
Z)
$220,000
Actual Results
Flexible Variances
Flexible Budget
Volume Variances
Sales-Static
Units sold
A)B)
C)
D)
E)
Sales
F)
G)
H)
I)
J)
Variable costs
K)
L)
M)
N)
O)
Contribution margin
P)
Q)
R)
S)
T)
Fixed costs
U)
V)
660,000
0
660,000
Operating income
W)
X)
Y)
Z)
$220,000
Explanation / Answer
Actual Results Flexible Variances Flexible Budget Volume Variances Sales-Static Units 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 costs 627000 33,000 F 6,60,000 0 None 6,60,000 Operating income 477000 2,17,000 F 2,60,000 40000 F 2,20,000
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