Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 21: Q4QS (page 968)

Refer to information in QS 21-3. 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.

Short Answer

Expert verified

The performance report is showing the favorable variance of$53,000.

Step by step solution

01

Meaning of Flexible Budget Performance Report

The business entities use a flexible budget performance report to find the variances between desired and actual outcomes. Such a report facilitates the management to makeshort-term decisions.

02

Preparation of flexible budget performance report

Brodrick Company
Flexible Budget Performance Report
For the year ended December 31

Particulars

Flexible Budget ($)

Actual Result ($)

Variances ($)

Sales (20,000 units)

400,000

480,000

80,000 (F)

Variable costs

80,000

112,000

32,000 (U)

Contribution margin

320,000

368,000

48,000 (F)

Fixed cost

150,000

145,000

5,000 (F)

Income from operations

$170,000

$223,000

$53,000 (F)

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Question: Refer to information in QS 21-3. 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.

MM Co. uses corrugated cardboard to ship its product to customers. Management believes it has found a more efficient way to package its products and use less cardboard. This new approach will reduce shipping costs from \(10.00 per shipment to \)9.25 per shipment.

If the company forecasts 1,200 shipments this year, what amount of total direct materials costs would appear on the shipping department’s flexible budget?

How much is this sustainability improvement predicted to save in direct materials costs for this coming year?

Hart Company made 3,000 bookshelves using 22,000 board feet of wood costing \(266,200. The company’s direct materials standards for one bookshelf are 8 board feet of wood at \)12 per board foot.

  1. Compute the direct materials price and quantity variances and classify each as favorable or unfavorable.

  2. Interpret the direct materials variances.

After evaluating Null Company’s manufacturing process, management decides to establish standards of 3 hours of direct labor per unit of product and \(15 per hour for the labor rate. During October, the company uses 16,250 hours of direct labor at a \)247,000 total cost to produce 5,600 units of product. In November, the company uses 22,000 hours of direct labor at a $335,500 total cost to produce 6,000 units of product.

1. Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor cost variance for each of these two months. Classify each variance as favorable or unfavorable.

2. Interpret the October direct labor variances.

After evaluating Null Company’s manufacturing process, management decides to establish standards of 3 hours of direct labor per unit of product and \(15 per hour for the labor rate. During October, the company uses 16,250 hours of direct labor at a \)247,000 total cost to produce 5,600 units of product. In November, the company uses 22,000 hours of direct labor at a $335,500 total cost to produce 6,000 units of product.

1. Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor cost variance for each of these two months. Classify each variance as favorable or unfavorable.

2. Interpret the October direct labor variances.
See all solutions

Recommended explanations on Business Studies Textbooks

Corporate Finance

Read Explanation

Intermediate Accounting

Read Explanation

Introduction to Business

Read Explanation

Financial Performance

Read Explanation

Strategic Direction

Read Explanation

Human Resources

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free