Question

Orcutt Corporation prepared a budget last period that called for sales of 9,000 units at a price of $12 each. The costs were estimated to be $5 variable per unit and $27,000 fixed. During the period, actual production and actual sales were 9,200 units. The actual selling price was $12.15 per unit. Variable costs were $5.90 per unit. Actual fixed costs were $27,000.

1. Flexible-budget Ol variance

2. Static-budget Ol variance

3. Sales volume Ol variance

4. Static-budget sales variance

5. Sales price variance

6. Sales volume variance

Answer 1

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	Actual	Flexible Variance	Type	Flexible	Static Variance	Type	Static
No of Units	9,200			9,200			9,000
Sale Value	$           111,780	$                 1,380	F	$110,400	$              2,400	F	$108,000
Less: Variable Cost	$             54,280	$                 8,280	U	$ 46,000	$              1,000	U	$ 45,000
Contribution Margin	$             57,500	$                 6,900	U	$ 64,400	$              1,400	F	$ 63,000
Less: Fixed Cost	$             27,000	$                       -	None	$ 27,000	$                    -	None	$ 27,000
Operating Income	$             30,500	$                 6,900	U	$ 37,400	$              1,400	F	$ 36,000
1. Flexible-budget Ol variance		$                 6,900	U
2. Static-budget Ol variance		$                 1,400	F
3. Sales volume Ol variance	30500-36000	$                 5,500	U
4. Static-budget sales variance	111780-108000	$                 3,780	F
5. Sales price variance		$                 1,380	F
6. Sales volume variance		$                 2,400	F