Answer:
A. Flexible Material Budget = $21,600
B. Flexible Material Budget Variance = $1,800 (unfavorable)
C. The sales-volume variance for materials = $3,600 (favorable)
Explanation:
Dynondo Incorporated
A Flexible Budget adjusts the volume of an already approved Master Budget to reflect the Actual Volumes before carrying out a variance Analysis of Actual versus Budget. This is unlike the normal variance process where the volume is for Budget remains fixed and is compared to Actual to reflect a favorable or unfavorable comparison
Budgeted Material Cost = $12 Per Unit.......(a)
Actual Material cost = $13 Per Unit.......(b)
Actual Volume = 1,800......(c)
Budgeted Volume = 1,500......(d)
A. Flexible Material Budget amount = (c) x (a) = 1,800 x $12
= $21,600.........(e)
B. Flexible Material Budget Variance = Actual Material Cost minus (e)
= ($13 x 1,800) minus $21,600
= $23,400 - $21,600
=$1,800 (unfavorable)
C. The sales-volume variance for materials = Budgeted Price per Unit x (Actual Units Sold – Budgeted Units Sold)
= (a) x [(c) - (d)]
= $12 x (1,800 minus 1,500)
= $12 x 300
= $3,600.
