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Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Flexible Budget and Operating-Income Variances Assume that Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 900 units for $840 each in June. The company incurred $414,000 total variable expenses and $180,000 total fixed expenses.
Required for the Month of June:
1. Prepare a flexible budget for the production and sale of 900 units.
2. Compute for June:
?a. The sales volume variance, in terms of operating income.
?b. The sales volume variance, in terms of contribution margin.
3. Calculate for June:
?a. The total flexible-budget (FB) variance.
?b. The total variable cost flexible-budget variance.
?c. The total fixed cost flexible-budget (FB) variance.
?d. The selling price variance.
Verified
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Analysis of variances can be defined as the comparison between the actual data and the budgeted data. In other words it can be said that the variances are derived from the difference between the actual and standard data. The budgets are made by management usually based on the actual data of the past year. The variance analysis helps the management to identify the cost and revenue center performance.
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