Question

In: Accounting

Top managers of Preston Industries predicted 2018 sales of 15,200 units of its product at a...

Top managers of Preston Industries predicted 2018 sales of 15,200 units of its product at a unit price of $7.00. Actual sales for the year were 14,4000 units at $9.50 each. Variable costs were budgeted at $2.70 per unit, and actual variable costs were $2.80 per unit. Actual fixed costs of $45,000 exceeded budgeted fixed costs by $5,300.

Prepare Preston's flexible budget performance report. What variance contributed most to the year's favorable results? what caused this variance?

Prepare: flexible budget performance report for the year. First, complete the flexible budget performance report through the contribution margin line, then complete the report through the operating income line. Finally, compute the total variances (Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (F) unfavorable (U) input blank)

Preston Industries

Flexible Budget Performance Report

For the year Ended December 31, 2018

1 2 3 4 5

(1) - (3) (3) - (5)

____________________________________________________________________________________________________________________

Budget Flexible Sales

Amounts Actual Budget Flexible Volume Static

Per unit Results Variance Budget Variance Budget

_____________________________________________________________________________________________________________________

Units ____________ _______________ ______________

_____________________________________________________________________________________________________________________

Sales Revenue _______ __________ _________ __ ______________ ___________ __ _________________

Variable Costs _______ __________ _________ __ ______________ ___________ __ _________________

Contribution Margin __________ _________ __ ______________ ___________ __ _________________

Fixed Costs __________ _________ __ ______________ ___________ __ _________________

Operating Income __________ _________ __ ______________ ___________ __ _________________

Flexible Budget Variance Sales Volume Variance

$ ____________ __ $ __________ __

________________________________________________________________________

Static Budget Variance

$ _________________ __

Expert Solution

ekkarill92 answered 2 years ago

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