Question

No phot or handwriting (managerial accounting)

1. Prepare a Flexible Budget based upon Actual Output. Assume the actual units of production. The budget should consist of one revenue item and at least five expenses items. One expense should be semi-variable in nature, two should be variable and two should be fixed in nature.

You are also required to compare the Flexible Budget with your Actual Results showing the Variance in a tabular form.

Answer 1

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			Revenue and spending				Activity Variance
		Actual Results	Variance	F/U/None	Flexible Budget	Working	Variance	F/U/None	Planning budget
Jobs		158	-	None	158		8	F	150
Revenue		$           38,650	$    4,958	U	$             43,608	158*$276	$    2,208	F	$               41,400	150*$276
Technician Wages		$             7,850	$       150	F	$               8,000		$          -	N	$                 8,000		Variable
Mobile lab operating		$             9,140	$       416	F	$               9,556	$4,500+(158*$32)	$       256	U	$                 9,300	$4,500+(150*$32)	Semi
Office Expense		$             2,850	$       166	F	$               3,016	$2,700+(158*$2)	$         16	U	$                 3,000	$2,700+(150*$2)	Semi
Advertising Expense		$             1,640	$         70	U	$               1,570		$          -	N	$                 1,570		Fixed
Insurance		$             2,870	$          -	None	$               2,870		$          -	N	$                 2,870		Fixed
Miscellaneous Expense		$                575	$       711	F	$               1,286	$970+(158*$2)	$         16	U	$                 1,270	$970+(150*$2)	Semi
Total Expense		$           24,925	$    1,373	F	$             26,298		$       288	U	$               26,010
Net Income		$           13,725	$    3,585	U	$             17,310		$    1,920	F	$               15,390