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.

1. What is the total Activity Variance?

2. What is the total Revenue and Spending Variance?

3. What is the individual Revenue Variance?

4. What is the individual Spending Variance for Variable Manufacturing Cost?

5. What is the individual Spending Variance for Fixed Manufacturing Cost?

6. What is the individual Spending Variance for Variable Selling and Administrative Expenses?

7. What is the individual Spending Variance for Fixed Selling and Administrative Expenses?

8. What is the flexible budget amount for Revenue?

9. What is the flexible budget amount for Variable Manufacturing Costs?

10. What is the flexible budget amount for Fixed Manufacturing Costs?

11. What is the flexible budget amount for Variable Selling and Administrative Expenses?

12. What is the flexible budget amount for the Fixed Selling and Administrative Expenses?

13. What is the flexible budget amount for Budgeted Operating Income?

Answer 1

On the basis of above statement, all the other questions can be answered.
Revenue Variance = 14000 U
Total Variance = 10600 U
Variable mfr cost spending variance = 3000 F
Fixed mfr cost spending variance = 1000 U
Variable selling cost spending variance = 100 U
Fixed selling cost spending variance = 1500 F
Flexible budget amount for Revenue = $245000
Flexible budget amount for Var. mfr cost = $140000