Question

1.

Prepare a flexible budget performance report for

JulyJuly.

2.

What was the effect on

New BostonNew Boston​'s

operating income of selling

2 comma 0002,000

units more than the static budget level of​ sales?

3.

What is

New BostonNew Boston​'s

static budget variance for operating​ income?

4.

Explain why the flexible budget performance report provides more useful information to

New BostonNew Boston​'s

managers than the simple static budget variance. What insights can

New BostonNew Boston​'s

managers draw from this performance​ report?

New Boston Technologies

Flexible Budget

For the Month Ended July 31, 2016

Budget

Amount

per Unit

Units

6,500

8,000

10,000

Sales Revenue

$21

$136,500

$168,000

$210,000

Variable Expenses

11

71,500

88,000

110,000

Contribution Margin

65,000

80,000

100,000

Fixed Expenses

50,000

50,000

50,000

Operating Income

$15,000

$30,000

$50,000

Technologies manufactures capacitors for cellular base stations and other communications applications. The​ company's

JulyJuly

20162016

flexible budget shows output levels of

6 comma 5006,500​,

8 comma 0008,000​,

and

10 comma 00010,000

units. The static budget was based on expected sales of

8 comma 0008,000

units.

LOADING...

​(Click the icon to view the flexible​ budget.)                      The company sold

10 comma 00010,000

units during

JulyJuly​,

and its actual operating income was as​ follows:

LOADING...

​(Click the icon to view the income​ statement.)Read the requirements

LOADING...

.

New Boston Technologies

Income Statement

For the Month Ended July 31, 2016

Sales Revenue

$217,000

Variable Expenses

115,100

Contribution Margin

101,900

Fixed Expenses

51,000

Operating Income

$50,900

Requirement 1. Prepare a flexible budget performance report for

JulyJuly.

​(Enter a​ "0" for any zero balances. For any​ $0 variances, leave the Favorable​ (F)/Unfavorable (U) input​ blank.)

New Boston Technologies
Flexible Budget Performance Report
For the Month Ended July 31, 2016
		1	2		3	4		5
			(1) - (3)			(3) - (5)
	Budget		Flexible			Sales
	Amounts	Actual	Budget		Flexible	Volume		Static
	Per Unit	Results	Variance		Budget	Variance		Budget
Units		10,000			10,000			8,000
Sales Revenue
Variable Expenses
Contribution Margin
Fixed Expenses
Operating Income

Answer 1

Flexible Budget Performance Report
For the Month Ended July 31, 2016
Units		6500		8000		10000
	Per Unit	Results ($)	Per Unit	Results ($)	Per Unit	Results ($)
Sales Revenue	$21	136500	$21	168000	$21	210000
Variable Expenses	$11	71500	$11	88000	$11	110000
Contribution Margin		65000		80000		100000
Fixed Expenses		50000		50000		50000
Operating Income		15000		30000		50000