Vintendo was at year-end and was disappointed based on its preliminary results.
Management expected sales volume to be 25,000 handheld video gaming units instead of the actual sales of 23,000 units. The company's budgeted information was as shown below:
a. Prepare a master budget and a flexible budget for Vintendo.
b. Compare the flexible budget to the master budget, determining the sales activity variances for all budgeted income statement accounts, specifying amount, and whether the variance is favorable (F) or unfavorable (U).
c. When Vintendo finalizes its final results, which of the budgets, master or flexible, should it use to compare actual results to in order to determine variances?

Question

Vintendo was at year-end and was disappointed based on its preliminary results. 
Management expected sales volume to be 25,000 handheld video gaming units instead of the actual sales of 23,000 units. The company's budgeted information was as shown below:
  a. Prepare a master budget and a flexible budget for Vintendo.
b. Compare the flexible budget to the master budget, determining the sales activity variances for all budgeted income statement accounts, specifying amount, and whether the variance is favorable (F) or unfavorable (U).
c. When Vintendo finalizes its final results, which of the budgets, master or flexible, should it use to compare actual results to in order to determine variances?

Quizplus · Accepted Answer

The Answer of Vintendo was at year-end and was disappointed based on its preliminary results. 
Management expected sales volume to be 25,000 handheld video gaming units instead of the actual sales of 23,000 units. The company's budgeted information was as shown below:
  a. Prepare a master budget and a flexible budget for Vintendo.
b. Compare the flexible budget to the master budget, determining the sales activity variances for all budgeted income statement accounts, specifying amount, and whether the variance is favorable (F) or unfavorable (U).
c. When Vintendo finalizes its final results, which of the budgets, master or flexible, should it use to compare actual results to in order to determine variances?

Vintendo Was at Year-End and Was Disappointed Based on Its