Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 990 units for $705 each. During this month, the company incurred $415,800 total variable costs and $180,400 total fixed costs. The master budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 990 units. 2. Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. 3. Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable.
Comparison of Actual and Budgeted Operating Income SCHMIDT MACHINERY COMPANY Analysis of Operating Income For October 2022 (1) Actual Operating Income (2) Master Budget (3) Variances Units 780 1,000 220 U* Sales $ 639,600 100% $ 800,000 100% Variable costs 350,950 55 450,000 56 $ 160,400 U 99,050 F** $ 61,350 U 10,650 U Contribution margin 45% 44% $ 288,650 160,650*** $ 350,000 150,000+ Fixed costs 25 19 Operating income $ 128,000 20% $ 200,000 25% $ 72,000 U *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income. ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30,000. Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000.
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a flexible budget for the production and sale of 990 units. Units sold ales Fixed costs Variable costs Required 1 Required 2 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. Show less A Sales Volume Variance Operating income Contribution margin < Required 1 Required 3 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable. Show less a. The total flexible budget variance b. The total variable cost flexible budget variance c. The total fixed cost flexible budget variance d. The selling price variance < Required 2 Required 3