Top managers of White Industries predicted 2016 sales of 14 comma 800 units of i
ID: 2467287 • Letter: T
Question
Top managers of White Industries predicted 2016 sales of 14 comma 800 units of its product at a unit price of $ 7.50. Actual sales for the year were 14 comma 000 units at $ 8.50 each. Variable costs were budgeted at $ 2.10 per unit, and actual variable costs were $ 2.20 per unit. Actual fixed costs of $ 48 comma 000 exceeded budgeted fixed costs by $ 2 comma 000. Prepare White's flexible budget performance report. What variance contributed most to the year's favorable results? What caused this variance?
Explanation / Answer
Answer:
variance for a higher-than-expected price
White Industries Flexible Budget Performance Report For the Year Ended December 31, 2016 1 2 (1-3) 3 4(3-5) 5 Particulars Budget Amounts Per unit Actual Results Flexible budget variance Flexible Budget Sales volume variance Static Budget units 14000 14000 14800 Sales Revenue 7.5 119000 14000 F 105000 -6000 U 111000 Variable costs 2.1 30800 1400 U 29400 -1680 F 31080 Contribution margin 88200 12600 F 75600 -4320 U 79920 Fixed costs 48000 2000 U 46000 0 46000 Operating income 40200 10600 F 29600 -4320 U 33920