Question
In: Finance
Hanno had the following static budget for March, when it expected to sell 4,000 sandwiches: Sales...
Hanno had the following static budget for March, when it expected to sell 4,000 sandwiches:
| Sales revenue | $ 48,000 |
| Variable costs | $ 32,000 |
| Fixed costs | $ 5,000 |
| Net income | $11,000 |
Hanno actually sold 5,000 sandwiches during March at $12 each.
Variable costs were $38,000 and fixed costs were $4,800.
A. Prepare a flexible budget at for March that will help Hanno separate the volume variance from the flexible budget variance. Make your income statement match my format and compute net income.
B. What is the volume variance for variable costs?
C. What is the flexible budget variance for variable costs?
Solutions
Expert Solution
| Description | 4000 Units | Per unit | ||||
| Sales revenue | $48,000 | 12.00 | ||||
| Variable costs | $32,000 | 8.00 | ||||
| Fixed costs | $5,000 | 1.25 | ||||
| Net income | $11,000 | 2.75 | ||||
| Budgeted | Actual | |||||
| Description | 5000 Units | Per unit | Per unit | |||
| Sales revenue | $60,000 | 12.00 | $60,000 | 12.00 | ||
| Variable costs | $40,000 | 8.00 | $38,000 | 7.60 | ||
| Fixed costs | $5,000 | 1.00 | $4,800 | 0.96 | ||
| Net income | $15,000 | 3.00 | $17,200 | 3.44 | ||
| Material quanitity variance | = (Standard production - Actual production) * Budgered Price | |||||
| = (5000 - 5000)*8 | ||||||
| 0 | ||||||
| Flexible budget variance | = (Standard Quantity - Actual Quantity) * Budgered Price | |||||
| = (4000 - 5000)*8 | ||||||
| (8,000) | ||||||
jeff jeffy answered 2 years agoRelated Solutions
The following static budget is provided: Static Budget Per Unit Total at 15,000 units Sales $60...
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Static Budget
Per Unit
Total at 15,000 units
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Less variable costs:
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(450,000)
Selling and administrative costs
(10)
(150,000)
Contribution margin
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Less fixed costs:
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Selling and administrative costs
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Total fixed costs
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Net income
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Unit
Sales 10,000 15,000 5,000
F
Variable Expenses:
Commissions $30,000
$33,000 $3,000 U
Advertising $1,000
$1,200 $200 U
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$11,000 $1,000 U
Samples $2,500
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47,500 $4,000 U
Fixed Expenses
Rent $5,000
$5,000 0
Salaries –
Sales $2,000
$2,000 0
Salaries –
Office $1,200
$1,200 0
Depreciation $1,500
$1,500 0
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$9,700 0
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Grenoble Enterprises had sales of
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$60,200in April. Forecast sales for May, June, and July are
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respectively. The firm has a cash balance of
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on May 1 and wishes to maintain a minimum cash balance of
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