Please explain the calculation for Question 1 and 2 only, actual units sold is 18,000 not 16,000:
Bellaton Industries is a manufacturing company located in Europe that has just completed the first month of a new fiscal year. The Finance Department is reviewing the variance of actual results to the master budget. The expenditure within the marketing and facilities departments makes up most of the fixed costs. The sales operations department is responsible for revenue. The actual results and master budget are shown below.
Bellaton Budget
Actual Master Budget
Units Sold 18,000 16,000
Revenue 1,512,000 1,360,000
Variable Cost
Direct Material (792,000) (672,000)
Direct Labor (252,000) (240,000)
Variable Overhead (144,000) (128,000)
Contribution Margin 324,000 320,000
Fixed Cost (210,000) (215,000)
Operating income 114,000 105,000
Question 1. Prepare a flexible budget based on the actual sales volume (Negative amounts should be indicated with a minus sign)
Budget
Units Sold
Revenue
Variable Cost
Direct Material
Direct Labor
Variable Overhead
Contribution Margin
Fixed Costs
Operating Income
Question 2
Calculate the flexible budget variances by comparing actual results to the flexible budget. (Negative amounts should be indicated with a minus sign)
Actual Results Flexible Budget Variance (Amount) (U or F)
Units Sold
Revenue
Variable Costs
Direct Material
Direct Labor
Variable Overhead
Contribution Magin
Fixed Cost
Operating Income