Question

Stampede Corporation, a Calgary based steak house, used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit.

	Actual	Budgeted
Units Sold	200,000units	203,000
Variable Costs	1,250,000	1,500,000
Fixed Costs	925,000	900,000

Required:

1) Prepare a Level 1 static-budget variance analysis for Stampede Corporation using an income statement in contribution margin format. Use the following three column headings: Actual Results, Static Budget, and Static-budget Variance.

Answer 1

Static-budget variance analysis
	Actual Results	Static-budget Variance		Static-budget Variance
Sales Revenue	$                        4,000,000.00	$      60,000.00	Unfavorable	$                   4,060,000.00
Variable Costs	$                        1,250,000.00	$    250,000.00	Favorable	$                   1,500,000.00
Contrbution Per unit	$                        2,750,000.00	$    190,000.00	Favorable	$                   2,560,000.00
Fixed Cost	$                           925,000.00	$      25,000.00	Unfavorable	$                      900,000.00
Net Income	$                        1,825,000.00	$    165,000.00	Favorable	$                   1,660,000.00