Assume that in June Schmidt Machinery Company (Exhibit 14.1) manufactured and so
ID: 2598173 • Letter: A
Question
Assume that in June Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 970 units for $837 each. During this month the company incurred $499,550 total variable expenses and $180,200 total fixed expenses.
Compute for June:
The sales volume variance, in terms of contribution margin. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Calculate for June: (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Assume that in June Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 970 units for $837 each. During this month the company incurred $499,550 total variable expenses and $180,200 total fixed expenses.
Explanation / Answer
Note - Exhibit 14.1 with reference from Cost Management - A Strategic Emphasis
Assuming The master budget is as following
1.
Flexible Budget At 97% (For Production ans sale of 970 units)
2.
a. The sales volume variance, in terms of operating income =
Flexible budget operating income - Master budget Operating Income = $189500 - $200000 = $10500 Unfavorable
b. The sales volume variance, in terms of contribution margin =
Flexible budget contribution margin - Master budget contribution margin = $339500 - $350000 = $10500 Unfavorable
[Note - Answers are given for only questions required]
Units 1000 Sales @800 Per Unit $800000 Variable Costs $450000 Contribution margin $350000 Fixed Cost $150000 Master Budgeted Operating Income $200000