Question

Bay City Company’s fixed budget performance report for July follows. The $440,000 budgeted total expenses include $300,000 variable expenses and $140,000 fixed expenses. Actual expenses include $130,000 fixed expenses. Fixed Budget Actual Results Variances Sales (in units) 6,000 4,900 Sales (in dollars) $480,000 $431,200 $48,800 U Total expenses 440,000 406,000 34,000 F Income from operations $40,000 $25,200 $14,800 U Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately.

Answer 1

Bay City Company

Flexible Budget Performance Report:

Flexible Budget Actual Results Variances

Sales (in units) 4,900 4,900

Sales (in dollars) $392,000 $431,200 $39,200 F

Total expenses:

Variable expenses 245,000 276,000 31,200 U

Fixed expenses 140,000 130,000 10,000 F

Total expenses 385,000 406,000 21,200 U

Income from operations $7,000 $25,200 $18,200 U

Step-by-step explanation:

a) Data and Calculations:

Variable expenses = $300,000

Fixed expenses = $140,000

Budgeted total expenses = $440,000

Actual expenses:

Fixed expenses = $130,000

Fixed Budget Actual Results Variances

Sales (in units) 6,000 4,900

Sales (in dollars) $480,000 $431,200 $48,800 U

Total expenses 440,000 406,000 34,000 F

Income from operations $40,000 $25,200 $14,800 U

Flexing the budgets:

Sales revenue = $392,000 ($480,000/6,000 * 4,900)

Variable expenses = $245,000 ($300,000/6,000 * $4,900)

Actual variable expenses = $276,000 ($406,000 - $130,000)