Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

Q1SP

Expert-verified
Financial & Managerial Accounting
Found in: Page 982
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Business Solutions’s second-quarter 2018 fixed budget performance report for its computer furniture operations follows. The $156,000 budgeted expenses include $108,000 in variable expenses for desks and $18,000 in variable expenses for chairs, as well as $30,000 fixed expenses. The actual expenses include $31,000 fixed expenses. Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately.

Fixed Budget

Actual Results

Variances

Desk sales (in units)

144

150

Chair sales (in units)

72

80

Desk sales

$180,000

$186,000

$6,000 F

Chair sales

36,000

41,200

5,200 F

Total expenses

156,000

163,880

7,880 U

Income from operations

$60,000

$63,320

$3,320 F

Income from operations of the company is unfavorable.

See the step by step solution

Step by Step Solution

Step 1: Meaning of Flexible Budget

A flexible budget refers to a report prepared on management estimates that facilitate the computation of the contribution margin and determines the income from operations after deducting all relevant costs.

Step 2: Preparation of flexible budget performance report

Particulars

Flexible Budget

($)

Actual Results ($)

Variances

Sale of desks

180,000/144*150= 187,500

186,000

1,500 U

Sale of chairs

36,000/72*80= 40,000

41,200

1,200 F

Total sales

227,500

227,200

Less: Variable expenses

Desks

108,000/144*150= 112,500

Chairs

18,000/72*80= 20,000

Total variable expenses

132,500

132,880

380 U

Contribution margin

95,000

94,320

680 U

Less: Fixed cost

30,000

31,000

1,000 U

Income from operations

65,000

63,320

1,680 U

Most popular questions for Business-studies Textbooks

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.