Question

Business Solutions's second-quarter 2018 fixed budget performance report for its computer furniture operations follows. The $175,840 budgeted expenses include $121,180 in variable expenses for desks and $15,660 in variable expenses for chairs, as well as $39,000 fixed expenses. The actual expenses include $40,900 fixed expenses. List fixed and variable expenses separately. Fixed Budget Actual Results Variances Desk sales (in units) 146 152 Chair sales (in units) 58 66 Desk sales $ 186,880 $ 193,040 $ 6,160 F Chair sales 31,320 36,630 5,310 F Total expenses 175,840 185,350 9,510 U Income from operations $ 42,360 $ 44,320 $ 1,960 F Prepare a flexible budget performance report that shows any variances between budgeted results and actual results.

Answer 1

Ans.	BUSINESS SOLUTIONS
	Flexible Budget Performance Report
		Flexible budget	Actual results	Variance
	Desk Sales	194560	193040	1520	U
	Chairs Sales	35640	36630	990	F
	Variable expenses	143980	144450	470	U
	Contribution margin	86220	85220	1000	U
	Fixed expenses	39000	40900	1900	U
	Income from operations	47220	44320	2900	U
	Calculations for Flexible Budget: (prepared on the basis of actual units sold).
	Desk (units)	152
	Chairs (units)	66
	Sales (desk)	186880 / 146 * 152 =	194560
	Sales (chairs)	31320 / 58 * 66    =	35640
	Variable cost:
	Desk	121180 / 146 * 152 =	126160
	Chairs	15660 / 58 * 66     =	17820
	Total variable expenses		143980
	Fixed expenses	39000	(same as fixed budget.)
	*Calculations for Actual results:
	Variable expense = Total expenses - Fixed expenses
		185350 - 40900
		144450