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Exercise 21-4 Preparing a flexible budget performance report LO P1 Xion Co. budgets a selling price...

Exercise 21-4 Preparing a flexible budget performance report LO P1

Xion Co. budgets a selling price of $81 per unit, variable costs of $34 per unit, and total fixed costs of $280,000. During June, the company produced and sold 11,800 units and incurred actual variable costs of $361,000 and actual fixed costs of $295,000. Actual sales for June were $985,000.

Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance)

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Answer #1

  FLEXIBLE BUDGET

flexible budget actual variance favourable or unfavourable
production 11800 11800
sales 955800 985000 29200 favourable
variable cost 401200 361000 40200 favourable
fixed cost 280000 295000 (15000) unfavourable

notes:

1. fixed cost for flexible budget is same as budgeted fixed cost and actual fixed cost is given in the question.

2. budgeted variable cost = 11800/34 = $401200 and actual variable cost is given.

3. budgeted sales = 81x 11800 = $955800 and actual sales is given.

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