Question

budget variance analysis (5 column analysis)

use the contribution margin format( Revenue Less Varable Costs= contribution margin less fixed costs = Operating Income

Please show work

data for the month of April:

Actual results:

Revenue 9,600 pairs of glasses at 29 a pair

Variable costs 24 a pair

Fixed costs 18,200

Master budget:

Revenue sales 9,000 pairs at 30 a pair glasses

Variable costs 23 a pair

Fixed costs 18,000

please show work!

Required:

1) what is the total sales activity in April?

2) what is the flexible budget variance for April column 2?

Answer 1

1)	Total sales activity in April	=	$ 2,78,400
2)	Flexible Budget Variance	=	$     19,400	Unfavorable
Workings:
		Budget amount per unit	Actual Results
	Number of pairs of glasses		9,600
	Sales Revenue	$             29	$ 2,78,400
Less:	Variable Expenses	$             24	$ 2,30,400
	Contribution margin		$     48,000
Less:	Fixed Expenses		$     18,200
	Operating Income		$     29,800
		Budget amount per unit	Flexible Budget
	Number of pairs of glasses		9,600
	Sales Revenue	$             30	288000
Less:	Variable Expenses	$             23	220800
	Contribution margin		$     67,200
Less:	Fixed Expenses		$     18,000
	Operating Income		$     49,200
		Actual Results	Flexible Budget Variance		Flexible Budget
	Units	9,600			9,600
	Sales Revenue	$ 2,78,400	$       9,600	U	$2,88,000
Less:	Variable Expenses	$ 2,30,400	$       9,600	U	$2,20,800
	Contribution margin	$     48,000	$     19,200	U	$    67,200
Less:	Fixed Expenses	$     18,200	$ 200	U	$    18,000
	Operating Income	$     29,800	$     19,400	U	$    49,200