Question

# Brodrick Company expects to produce 21,600 units for the year ending December 31. A flexible budget...

Brodrick Company expects to produce 21,600 units for the year ending December 31. A flexible budget for 21,600 units of production reflects sales of \$626,400; variable costs of \$64,800; and fixed costs of \$141,000.

QS 08-4 Flexible budget performance report LO P1

Assume that actual sales for the year are \$752,500 (27,500 units), actual variable costs for the year are \$113,100, and actual fixed costs for the year are \$133,000.

Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)

#### Homework Answers

Answer #1
 Flexible budget performance report Flexible budget Actual results variance Favorable/unfavorable sale 797,500 752,500 45,000 unfavorable variable expenses 82,500 113,100 30,600 unfavorable contribution margin 715,000 639,400 14,400 unfavorable fixed expenses 141,000 133,000 8,000 Favorable income from operation 574,000 506,000 6,400 unfavorable Working sales (626,400/21,600) * 27,500=797,500 variable expenses= (64,800/21,600)*27,500=82,500

Working note

Variance of contribution margin = Sales variance - variable expense variance

Variance of income from operations = contribution margin variance - fixed expense variance

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