Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Flexible Budgets; Total Operating Income Variance; Breakdown of the Total Operating Income...

Flexible Budgets; Total Operating Income Variance; Breakdown of the Total Operating Income Variance; Spreadsheet Application The following information is available for Brownstone Products Company for

Flexible Budgets; Total Operating Income Variance; Breakdown of the Total Operating Income Variance; Spreadsheet Application The following information is available for Brownstone Products Company for the month of July:

 

Actual

Master Budget

Units

3,800

4,000

Sales revenue

$53,200

$60,000

Variable manufacturing costs

19,000

16,000

Fixed manufacturing costs

16,000

15,000

Variable selling and administrative expenses

7,700

8,000

Fixed selling and administrative expenses

10,000

9,000

Required

  1. What was the total operating income variance for July, rounded to the nearest whole dollar? (Note: This variance is also called the master (static) budget variance for the period.) Was this variance favorable (F) or unfavorable (U)? 

  2. Set up a spreadsheet to compute the July sales volume variance and the flexible-budget variance for the month, both in terms of contribution margin and in terms of operating income. Round all dollar amounts to the nearest whole number.

  3. Discuss implications of these variances on strategic cost management for Brownstone.

  4. Configure your spreadsheet so that it will allow the firm to prepare pro-forma budgets for activities within its relevant range of operations. Use your spreadsheet to prepare a flexible budget for each of the following two output levels (round all dollar amounts in the flexible budgets to the nearest whole number):

  5. 3,750 units.

  6. 4,150 units.

(CMA Adapted)

 

Sep 12 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions