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4 December, 10:06

QS 21-4 Flexible budget performance report LO P1 Assume that actual sales for the year are $480,000 (26,000 units), actual variable costs for the year are $112,000, and actual fixed costs for the year are $145,000. Prepare a flexible budget performance report for the year.

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  1. 4 December, 11:53
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    The preparation of the flexible budget performance report for the year is presented below:

    Explanation:

    The preparation of the flexible budget performance report for the year

    Flexible budget performance report

    Flexible budget Actual results Variance fav or unfav

    sales $520,000 $480,000 $40,000 Unfav

    variable cost ($104,000) ($112,000) $8,000 Unfav

    Contribution margin $416,000 $368,000 $48,000 Unfav

    Fixed cost ($150,000) ($145,000) $5,000 Fav

    Net operating

    income $266,000 $223,0 00 $43,000 Unfav

    Working Notes:

    The selling price per unit is

    = $400,000 : 20,000 units

    = $20 per unit

    So total sales = 26,000 units * $20 = 520,000

    And,

    Variable cost per unit is

    = $80,000 : 20,000 units

    = 4 per unit

    So, variable cost is = $4 * 26,000 units = $104,000

    If actual sales is less than the flexible budgets sales than it leads to unfavorable variance else it is favorable variance
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