Xion Co. budgets a selling price of $81 per unit, variable costs of $34 per unit, and total fixed costs of $280,000. During June, the company produced and sold 11,800 units and incurred actual variable costs of $361,000 and actual fixed costs of $295,000. Actual sales for June were $985,000. Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance)

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14 January, 22:58

Xion Co. budgets a selling price of $81 per unit, variable costs of $34 per unit, and total fixed costs of $280,000. During June, the company produced and sold 11,800 units and incurred actual variable costs of $361,000 and actual fixed costs of $295,000. Actual sales for June were $985,000. Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance)

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Sonia Petty · Answer 1

Answer and Explanation:

The preparation of the flexible budget is presented below:

Particulars Flexible budget Actual Variance Fav/Unfav

Sales revenue $955,800 $985,000 $29,200 Fav

(11,800 * $81)

Less:

variable cost $401,200 $361,000 $40,200 unfav

(11,800 * $34)

Contribution margin $554,600 $624,000 $69,400 fav

Less:

Fixed cost $280,000 $295,000 $15,000 unfav

Operating income $274,600 $329,000 $54,400

We simply applied the below formula

Operating income = Sales - variable cost - fixed cost