Question

Xion Co. budgets a selling price of $80 per unit, variable costs of $35 per unit, and total fixed costs of $270,000. During June, the company produced and sold 10,800 units and incurred actual variable costs of $351,000 and actual fixed costs of $285,000. Actual sales for June were $885,000. 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) XION CO. Flexible Budget Report For Month Ended June 30 Flexible Budget Actual Results Variances Fav./Unf.

Answer 1

FLEXIBLE BUDGET REPORT

Flexible budget Actual Variance

Activity level (units) 10,800 10,800 No variance

$ $

Sales 864,000 885,000 21,000(F)

Less: Variable cost:

Total variable cost 378,000 351,000 27,000(F)

Less: Fixed cost:

Total fixed cost 270,000 285,000 15,000(U)

Profit 216,000 249,000 33,000(U)

Step-by-step explanation:

In this report, the budgeted total variable cost is obtained by multiplying the variable cost per unit by the quantity of goods produced and sold.

The total fixed cost remains constant regardless of the quantity produced and sold.

Variance is the difference between the flexible budget and actual results.