Question

Xion Co. budgets a selling price of $81 per unit, variable costs of $35 per unit, and total fixed costs of $281,000. During June, the company produced and sold 11,900 units and incurred actual variable costs of $362,000 and actual fixed costs of $296,000. Actual sales for June were $995,000. Prepare a flexible budget report showing variances between budgeted and actual results.

Answer 1

Total Variance 70,600 fav.

Step-by-step explanation:

Xion Co.

Budget Analysis

Acutal Budgeted Variances

No of Units 11900 11900

Sales Price Per unit $ 83.61 $ 81

Sales Price $ 995,000 963,900 31,100 fav

Variable Cost Per unit 30.42 $ 35

Variable Costs $ 362,000 416500 54,500 fav

Contribution Margin $ 633,000 547,400 85,600 fav

Fixed Costs 296,000 $281,000 15,000 unfav

Gross Profit 337,000 266400 70,600 fav

We multiply the individual budgeted costs to the number of units to find the total budgeted costs. When the actual Revenues are greater than the budgeted revenues they are favorable. Similarly when the budgeted costs are greater than the actual costs they are also favorable.