Question

Xion Co. budgets a selling price of $85 per unit, variable costs of $34 per unit, and total fixed costs of $285,000. During June, the company produced and sold 12,300 units and incurred actual variable costs of $366,000 and actual fixed costs of $300,000. Actual sales for June were $1,090,000.

Required:
Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately.

Answer 1

XION CO.

Flexible budget report

For month ended June 30

Flexible Actual Variances Fav/Unf

budget results

Sales 1,045,500 1,090,000 44,500 Favorable

(-) Variable cost 418,200 366,000 52200 Favorable

Contribution 627,300 724,000 96,700 Favorable

(-) Fixed cost 285,000 300,000 15,000 Unfavorable

Net income 342,300 424,000 81,700 Favorable

Workings

Sales= 12,300 units * $85 = $1,045,500

Variable cost = 12,300 units * $34 =$418,200