90.2K

Verified Solution

Link Copied!

Assume that in October $2022$ the Schmidt Machinery Company $($Exhibit $14\mathrm{.}1)$ manufactured and sold $950$ units for $$854$ each. During this month, the company incurred $$380,000$ total variable costs and $$181,900$ total fixed costs. The master budget data for the month are as given in Exhibit $14\mathrm{.}1.$

Required:

$1.$ Prepare a flexible budget for the production and sale of $950$ units.

$2.$ Compute for October $2022$:

a$.$ The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable.

b$.$ The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable.

$3.$ Compute for October $2022$:

a$.$ The total flexible budget variance. Indicate whether this variance was favorable or unfavorable.

b$.$ The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable.

c$.$ The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable.

d$.$ The selling price variance. Indicate whether this variance was favorable or unfavorable.Comparison of Actual and Budgeted Operating Income

$*$U denotes an unfavorable effect on operating income.

$**$F denotes a favorable effect on operating income.

$***$Actual fixed factory overhead cost $=$$$130,650$; actual fixed selling and administrative costs $=$$$30,000.$

$$ Budgeted fixed factory overhead cost $=$$$120,000$; budgeted fixed selling and administrative costs $=$$$30,000.$

Answer & Explanation Solved by verified expert

See Answer