The Puinam Company produces engine parts for car manufacturers. A new accountant intern at Putnam has accidentally deleted the calculations on the company's variance analysis calculations for the year ended December 31, 2017. The following table is what remains of the data.
(Click the icon to view the data.)
Read the requirements
Requirement 1. Calculate all the required variances. (If your work is accurate, you will find that the total static-budget variance is $0.)
Begin with the flexible budget columns, then the sales volume variance column. Label each variance as favorable (F) or unfavorable (U). (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label. Round your answers to the nearest whole dollar.)
Actual
Flexible-Budget
Results
Variance
Flexible
Budget
Units sold
105,000
Revenues (sales)
$ 672,000
Variable costs
435,000
Contribution margin
237,000
Fixed costs
$ 148,400
Operating income
$ 88,600
Data Table
Performance Report
Year Ended December 31, 2017
Actual
Flexible-Budget Flexible
Results
Variances
Budget
Sales-Volume
Variances
Static
Budget
Units sold
105,000
94,000
Revenues (sales)
$ 672,000
$ 319,600
Variable costs
435,000
141,000
Contribution margin
237,000
178,600
Fixed costs
148,400
90,000
Operating income
$ 88,600
$ 88,600
Print
Requirements
1. Calculate all the required variances. (If your work is accurate, you will find that
the total static-budget variance is $0.)
2. What are the actual and budgeted selling prices? What are the actual and
budgeted variable costs per unit?
3. Review the variances you have calculated and discuss possible causes and
potential problems. What is the important lesson learned here?
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