Use the following information for the next three questions. Platz Company makes

Question

Use the following information for the next three questions. Platz Company makes chairs and planned to sell 3,200 chairs in its master budget for the coming year. The budgeted selling price is $45 per chair, variable costs are $15 per chair and budgeted fixed costs are $40,000 per month At the end of the year it was determined that Platz actually sold 3,100 chairs for $145,700. Total variable costs were $50,375 and fixed costs were $38,000. 4. The volume variance for sales revenue was A. $4,500 unfavorable B. $100 unfavorable C. $4,500 favorable D. $1,700 favorable 5. The flexible budget variance for sales revenue was A. $1,700 favorable B. S6,200 favorable C. $1,700 unfavorable D. $6,200 unfavorable 6. The volume variance for fixed costs is A. $2,000 favorable B. $0 C. 100 unfavorable D. $2.000 unfavorable

Explanation / Answer

4) Volume variance = (budgeted activity-actual activity) budgeted sale price

                            = (3200-3100)45

Volume variance = 4500 Unfavourable

so answer is a) $4500 unfavourable

5) Flexible budget variance of sales revenue :

Flexible budget variance for sales revenue = (actual activity*sale price-actual sales)

                                                              = (3100*45-145700)

Flexiblle budget variance for sales revenue = 6200 Favourable

so answer is b) $6200 favourable

6) Volume variance for fixed cost : Budeted fixed overhead-allocated fixed overhead

                                                = 40000-40000

Volume variance for fixed cost = 0

so answer is b) $0

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