Question

Xion Co. budgets a selling price of $81 per unit, variable costs of $35 per unit, and total fixed costs of $281,000. During June, the company produced and sold 11,900 units and incurred actual variable costs of $362,000 and actual fixed costs of $296,000. Actual sales for June were $995,000. Prepare a flexible budget report showing variances between budgeted and actual results.

Answer 1

Answer:

Total Variance 70,600 fav.

Explanation:

Xion Co.

Budget Analysis

                                 Acutal             Budgeted          Variances

No of Units               11900               11900

Sales Price Per unit  $ 83.61            $ 81

Sales Price               $ 995,000         963,900         31,100 fav

Variable Cost Per unit   30.42             $ 35      

Variable Costs            $ 362,000       416500           54,500 fav

Contribution Margin    $ 633,000      547,400           85,600 fav

Fixed Costs                296,000          $281,000          15,000 unfav

Gross Profit                  337,000          266400           70,600 fav

We multiply the individual  budgeted costs to the number of units to find the total budgeted costs. When the actual  Revenues are greater than the budgeted revenues they are favorable. Similarly when the budgeted costs are greater than the actual costs they are also favorable.