Question

Following is the static budget and actual results of Yoga Inc. for the month of April 20X4.

The management is pleased with the income higher than budgeted. However they understand that significant increase in units sold renders the comparison of actual results and the static budget unfair.

Required: You are required to prepare a flexible budget at actual level of output and calculate flexible budget variances.

	Actual	Static
Units	40,000	30,000
Revenue	236,000	180,000
Variable Costs:
Material	76,000	60,000
Labor	63,200	45,000
Factory Overhead	34,000	24,000
Contribution Margin	62,800	51,000
Fixed Costs:
Factory Overhead	12,880	12,000
Office Expenses	22,000	20,000
Operating Income	27,920	19,000

Answer 1