Question

Bickel Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of November:

Bickel Corporation
Comparison of Actual Results to Planning Budget
For the Month Ended November 30
	Actual Results			Planning Budget		Variances
Customers served		33,000			32,000
Revenue ($3.50q)	$	115,200		$	112,000	$	3,200	F
Expenses:
Wages and salaries ($23,200 + $1.22q)		63,460			62,240		1,220	U
Supplies ($0.62q)		17,840			19,840		2,000	F
Insurance ($5,100)		5,100			5,100		0	None
Miscellaneous expense ($4,100 + $0.31q)		12,020			14,020		2,000	F
Total expense		98,420			101,200		2,780	F
Net operating income	$	16,780		$	10,800	$	6,880	F

Required:

Prepare the company's flexible budget performance report for November. Label each variance as favorable (F) or unfavorable (U). (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

To prepare a flexible budget report, first flexible budget for actual curstomers served i.e. 33,000 should be prepared and flexible budget report which is a comparison of flexible budget with actual results.