Question

Serial Problem Business Solutions LO P1

Business Solutions's second-quarter 2020 fixed budget performance report for its computer furniture operations follows. The $161,230 budgeted expenses include $109,600 in variable expenses for desks and $18,630 in variable expenses for chairs, as well as $33,000 fixed expenses. The actual expenses include $34,300 fixed expenses. List fixed and variable expenses separately.

	Fixed Budget				Actual Results				Variances
Desk sales (in units)			137				143
Chair sales (in units)			69				77
Desk sales		$	172,620			$	178,750			$	6,130	F
Chair sales			36,570				41,965				5,395	F
Total expenses			161,230				169,890				8,660	U
Income from operations		$	47,960			$	50,825			$	2,865	F

Prepare a flexible budget performance report that shows any variances between budgeted results and actual results.

Answer 1

Flexible budget performance report
			Amount $
	Flexible Budget	Actual Results	Variances
Desk sales (in units)	143	143
Chair sales (in units)	77	77
Desk sales	180,180	178,750	1,430	U
Chair sales	40,810	41,965	1,155	F
Expenses
Variable Expense	135,190	135,590	400	U
Fixed Expense	33,000	34,300	1,300	U
Total expenses	168,190	169,890	1,700	U
Income from operations	52,800	50,825	1,975	U

Working
	Flexible Budget	Actual Results	Variances
Desk sales (in units)	143	143
Chair sales (in units)	77	77
Desk sales	=172620/137*143	178,750	1,430	U
Chair sales	=36570/69*77	41,965	1,155	F
Expenses
Variable Expense	=109600/137*143+18630/69*77	=169890-34300	400	U
Fixed Expense	33,000	34,300	1,300	U
Total expenses	168,190	169,890	1,700	U
Income from operations	52,800	50,825	1,975	U