Question

Wahlund Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. They prepared the following budget for October, when they planned on selling 6,500 units.

Revenue	$227,500
Variable Manufacturing Costs	130,000
Fixed Manufacturing Costs	35,000
Variable Selling and Administrative Expenses	6,500
Fixed Selling and Administrative Expenses	25,000
Budgeted Operating Income	$31,000

Actual results for October were:

Revenue (7,000 Units)	$231,000
Variable Manufacturing Costs	137,000
Fixed Manufacturing Costs	36,000
Variable Selling and Administrative Expenses	7,100
Fixed Selling and Administrative Expenses	23,500
Budgeted Operating Income	$27,400

Prepare a Flexible Budget Performance Report (complete Flexible Budget Analysis), including the total Activity Variance, total Revenue and Spending Variance, and individual Revenue and Spending Variances. All variances must be labeled as unfavorable (U) or favorable (F). Match each of the following items to the appropriate answer. Prepare the Flexible Budget Performance Report BEFORE you attempt to answer the questions.

- What is the total Activity Variance?       -   What is the total Revenue and Spending Variance?       - What is the individual Revenue Variance?       - What is the individual Spending Variance for Variable Manufacturing Cost?    What is the individual Spending Variance for Fixed Manufacturing Cost?       - What is the individual Spending Variance for Variable Selling and Administrative Expenses?       -    What is the individual Spending Variance for Fixed Selling and Administrative Expenses?       -    What is the flexible budget amount for Revenue?       - What is the flexible budget amount for Variable Manufacturing Costs?       - What is the flexible budget amount for Fixed Manufacturing Costs?       -    What is the flexible budget amount for Variable Selling and Administrative Expenses?       -    What is the flexible budget amount for the Fixed Selling and Administrative Expenses?       - What is the flexible budget amount for Budgeted Operating Income?

A. $3,000 F B. $25,000 C. $245,000 D. $100 U E. $7,000 F. $38,000 G. $1,000 U H. $35,000 I. $1,500 F J. $140,000 K. $14,000 U L. $7,000 U M. $10,600 F

Answer 1

			Flexible Budget Performance Report
	units			7000			7000			6,500
				Actual	Revenue & spending		Flexible	Activity variance		Planned
				results	Variance		budget			Budget
	Revenue			231,000	14,000	U	245000	17,500	F	227,500
	Variable manufacturing costs			137,000	3,000	F	140000	10,000	U	130,000
	Variable selling & adm cost			7,100	100	U	7000	500	U	6,500
	fixed manufacturing costs			36,000	1,000	U	35,000	0	N	35,000
	Fixed seling & adm cost			23,500	1,500	F	25,000	0	N	25,000
	Budgeted operating income			27,400	10,600	U	38,000	7,000	F	31,000
A	what is the total activity variance								7,000	U
B	what is the total revenue & spending variance								10,600	F
C	what is the individual revenue variance								14,000	U
D	what is the individual spending variance for Variable maufacturing cost								3,000	F
E	what is the individual spending variance for fixed manufacturing cost								1,000	U
F	what is the individual spending variance for variable selling & adm expense								100	U
G	what is the individual spending variance for fixed selling & adm expense								1,500	F
H	what is the flexible budget amount for revenue								245,000
I	what is the flexible budget amount for variable manufacturing costs								140000
J	what Is the flexibel budget for fixed manufacturing costs								35,000
K	what is the flexible budget amount for Variable selling and adm expense								7000
L	what is the flexible budget amount for fixed selling & adm expense								25,000
M	what is the flexible budget amount for Budgeted operating income								38,000