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)

Answer 1

Answer and Explanation:

The preparation of flexible budget report is shown below:-

Xion CO.

Flexible budget report

Flexible budget Actual results Variances Favorable/

Unfavorable

Sales $864,000 $885,000 $21,000 Favorable

(10,800 × $80)

(-) Variable

cost $378,000 $351,000 $27,000 Favorable

(10,800 × $35)

Contribution $486,000 $534,000 $48,000 Favorable

(-) Fixed cost $270,000 $285,000 $15,000 Unfavorable

Net income $216,000 $249,000 $33,000 Favorable