1. The master budget variance for July was <u>$3,900</u>, and this variance was <u>favorable</u>.
2. The July sales volume variances in terms of contribution margin and operating income are <u>$2,800 F</u> and <u>$3,900 F</u>, respectively.
3. The July flexible-budget variances in terms of contribution margin and operating income are <u>$5,550 F</u> and <u>$6,650 F</u>, respectively.
4. Flexible budgets for the following output levels are:
3,560 units 3,980 units
Sales revenue $53,400 $59,700
Variable manufacturing costs 14,240 15,920
Fixed manufacturing costs 12,460 13,930
Variable selling and
administrative expenses 7,120 7,960
Fixed selling and
administrative expenses 9,100 9,100
Operating Income $10,480 $12,790
<h3>Data and Calculations:</h3>
Actual Master Budget Per Unit Variance
Units 3,500 4,000 500 U
Sales revenue $ 54,300 $ 60,000 $15.00 $ 5,700 U
Variable manufacturing costs 10,000 16,000 4.00 6,000 F
Fixed manufacturing costs 13,000 14,000 3.50 1,000 F
Variable selling and
administrative expenses 6,500 8,000 2.00 1,500 F
Contribution margin $24,800 $22,000 $2,800 F
Fixed selling and
administrative expenses 8,000 9,100 1,100 F
Total costs $37,500 $47,100
Operating income $16,800 $12,900 $3,900 F
Sales volume variance:
Revenue per unit $15.51 $15.00 $0.51 F
<h3>Flexible-budget:</h3>
Actual Master Budget Variance
Units 3,500 3,500 U
Sales revenue $ 54,300 $ 52,500 $ 1,800 F
Variable manufacturing costs 10,000 14,000 4,000 F
Fixed manufacturing costs 13,000 12,250 750 U
Variable selling and
administrative expenses 6,500 7,000 500 F
Contribution margin $24,800 $19,250 $5,550 F
Fixed selling and
administrative expenses 8,000 9,100 1,100 F
Operating income $16,800 $10,150 $6,650 F
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