Question

Top managers of Marshall Industries predicted 2018 sales of 14,800 units of its product at a unit price of $9.50. Actual sales for the year were 14,600 units at $12 each. Variable costs were budgeted at 2.00 per unit and actual variable cost were $2.10 per unit. Actual fixed cost of 48,000 exceeded budget it fixed cost by 4,000.

Prepare a flexible budget performance report for the year. First,complete the flexible budget performance report through the contribution margin line, then complete the report through the operating income line.

Answer 1

Budget Actual

$ $

Volume 14,600.00 14,600.00

Price 9.50 12.00

Sales 138,700.00 175,200.00

Variable cost Per unit 2.00 2.10

Total variable cost 29,200.00 30,660.00

Contribution Margin 109,500.00 144,540.00

Fixed cost 44,000.00 48,000.00

Operating Income 65,500.00 96,540.00

Step-by-step explanation

First and foremost flexing a budget means revising the budget based on actual sales volumes, that is i what did above to calculate the margins as well as the operating income