Question

Xlon Co budgets a seling price of $ 86 per unit , varlable costs of $ 34 per unit , and total fixed costs of $ 286,000 . During June , the company produced and sold 12,400 units and incurred actual variable costs of $ 367,000 and actual fixed costs of $ 301,000 . Actual sales for June were $ 1,100,000 . Prepare a flexible budget report showing variances between budgeted and actual results . List variable and fixed expenses separately . ( Indicate the effect of each variance by selecting for favorable , unfavorable , and no variance )

Answer 1

Answer and Explanation:

The preparation of the flexible budget report is presented below;

Particulars Flexible budget Actual sales Variance fav or unfav

Sales $1,066,400 $1,100,000 $33,600 favorable

Less:

Variable expense $421,600 $367,000 $54,600 favorable

Contribution margin $644,800 $733,000 $88,200 favorable

Less:

Fixed expense $286,000 $301,000 $15,000 unfavorable

Net operating income $358,800 $432,000 $73,200 favorable