Question

Rogers Corporation prepared a budget last period that called for sales of 20,000 units at a price of $30 each. The production costs per unit were estimated to amount to $14.00 variable and $6.00 fixed. All selling and administrative costs were fixed at $50,000. During the period, production was 22,000 units. The actual selling price was $33.00 per unit. Actual variable costs were $16.00 per unit and actual fixed production costs totaled $66,000. Selling and administrative costs were 10% higher than the budgeted amounts.

Required:

a. Show operating statements for the actual output, as well as a static budget and a flexible budget.

b. Explain what is indicated when comparing the operating statements

Answer 1

			Budgeted
	Particulars	Actual	Static	Flexible
	Units	22000	20000	22000
	Selling price	$                     33.00	$                     30.00	$                  30.00
	Sales	$          726,000.00	$          600,000.00	$       660,000.00
Less:	Production cost
	Variable	$          352,000.00	$          280,000.00	$       308,000.00
		(22000* $ 16)	(20000* $ 14)	(22000* $ 14)
	Fixed	$             66,000.00	$          120,000.00	$       132,000.00
		(given)	(20000*$ 6)	(22000* $ 6)
	Selling and Adm. Cost	$             55,000.00	$            50,000.00	$          50,000.00
		(110% of $ 50000)
	Operating income	$          253,000.00	$          150,000.00	$       170,000.00