Question

Beech Company produced and sold 105,000 units of its product in May. For the level of production achieved in May, the budgeted amounts were: sales, $1,300,000; variable costs, $835,000; and fixed costs, $390,000. The following actual financial results are available for May. Actual Sales (105,000 units) $ 1,273,000 Variable costs 805,500 Fixed costs 390,000 Prepare a flexible budget performance report for May. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)

Answer 1

Sales$27,000 U

Variable costs $29,500 F

Contribution margin $2,500 F

Fixed costs $0

Income from operations $2,500 F

Step-by-step explanation:

Preparation of a flexible budget performance report for May.

Flexible Actual Variances

Sales: $1,300,000- $ 1,273,000=$27,000 U

Less Variable costs:

$835,000-805,500=$29,500F

=Contribution margin: $465,000-$467,500=$2,500 F

Less Fixed costs: $390,000-$390,000=$0

=Income from operations: $75,000-$77,500=$2,500 F

Therefore The flexible budget performance report for May VARIANCES will be :

Sales$27,000 U

Variable costs $29,500 F

Contribution margin $2,500 F

Fixed costs $0

Income from operations $2,500 F