Monday, 11 May 2015

Business Solutions’ second quarter 2012 fixed budget performance report for its computer furniture operations follows. The $156,000 budgeted expenses include $108,000 in variable expenses for desks and $18,000 in variable expenses for chairs, as well as $30,000 fixed expenses. The actual expenses include $31,000 fixed expenses.

Business Solutions’ second quarter 2012 fixed budget performance report for its computer furniture operations follows. The $156,000 budgeted expenses include $108,000 in variable expenses for desks and $18,000 in variable expenses for chairs, as well as $30,000 fixed expenses. The actual expenses include $31,000 fixed expenses.

  Fixed Budget Actual Results Variances
  Desk sales (in units)   144         150          
  Chair sales (in units)   72         80          
  Desk sales (in dollars) $ 180,000       $ 186,000       $ 6,000 F  
  Chair sales (in dollars) $ 36,000       $ 41,200       $ 5,200 F  
  Total expenses $ 156,000       $ 163,880       $ 7,880 U  
  Income from operations $ 60,000       $ 63,320       $ 3,320 F  


Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately.
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Explanation:
  Supporting computations      
  Total budgeted desk sales $ 180,000  
  Total units budgeted   144  
  Budgeted selling price $ 1,250  per unit  
  Flexible budget units   150  
  Flexible budget sales $ 187,500  
       
  Total budgeted chair sales $ 36,000  
  Total units budgeted   72  
  Budgeted selling price $ 500  per unit  
  Flexible budget units   80  
  Flexible budget sales $ 40,000  
       
  Total budgeted variable costs for desks $ 108,000  
  Total units budgeted   144  
  Budgeted variable expenses per desk $ 750  
  Flexible budget units   150  
  Flexible budget variable expenses for desks $ 112,500  
       
  Total budgeted variable costs for chairs $ 18,000  
  Total units budgeted   72  
  Budgeted variable expenses per chair $ 250  
  Flexible budget units   80  
  Flexible budget variable expenses for chairs $ 20,000  
       
  Total budgeted variable expenses* $ 132,500  
  Total actual expenses $ 163,880  
  Actual fixed expenses   31,000  
  

 
  Actual variable expenses $ 132,880  
  



 


*($112,500 + $20,000), from calculation above