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How to calculate a flexible budget for Direct material (Acrylic pile fabric)?
Actual $256,422
Master (Static) Budget $233,324
Master budget variance $23,098
Quantity allowed per unit 0.02381
Input price $35.00/Bolt
Standard Cost per unit $0.8333
One bolt of fabric is 10 yards long by 72 inches wide. Fabric for 42 finished units can be cut from one bolt
| Berkshire Toy Company |
| Statement of Operating Income for the Year Ended June 30, 1998 |
| | | Actual | Master Budget | Master Budget Variance | F/ U | Flexible Budget | Flexible Budget Variance | F/ U |
| Units sold | | 325,556 | 280,000 | 45,556 | F | 325,556 | | |
| | | | | | | | | |
| Retail and catalog in units | 174,965 | 8,573,285 | 11,662,000 | 3,088,715 | U | 8,573,285 | | |
| Internet | 105,429 | 4,428,018 | - | (4,428,018) | F | 4,428,018 | | |
| Wholesale | 45,162 | 1,445,184 | 1,344,000 | (101,184) | F | 1,445,184 | | |
| Total units | 325,556 | | | | | | | |
| Total Revenue | | 14,446,487 | 13,006,000 | (1,440,487) | F | 14,446,487 | | |
| | | | | | | | | |
| Variable Production Costs | | | | | | | | |
| Direct Materials | | | | | | | | |
| Acrylic pile fabric | | 256,422 | 233,324 | (23,098) | U | | 256,422 | F |
| 10-mm acrylic eye | | 125,637 | 106,400 | (19,237) | U | | 125,637 | U |
| 45-mm plastic joints | | 246,002 | 196,000 | (50,002) | U | | 246,002 | U |
| polyester fiber filling | | 450,856 | 365,400 | (85,456) | U | | 450,856 | U |
| woven label | | 16,422 | 14,000 | (2,422) | U | | 16,422 | U |
| designer box | | 69,488 | 67,200 | (2,288) | U | | 69,488 | F |
| accessories | | 66,013 | 33,600 | (32,413) | U | | 66,013 | U |
| Total Direct Labor Materials | 1,230,840 | 1,015,924 | (214,916) | U | | 1,230,840 | U |
| | | | | | | | | |
| Direct labor | | 3,668,305 | 2,688,000 | (980,305) | U | | | U |
| variable overhead | | 1,725,665 | 1,046,304 | (679,361) | U | | | U |
| Total variable production costs | 6,624,810 | 4,750,228 | (1,874,582) | U | | | U |
| Variable Selling expenses | | 1,859,594 | 1,218,280 | (641,314) | | | | U |
| Total variable expenses | | 8,484,404 | 5,968,508 | (7,266,124) | U | | | U |
| Contribution Margin | | 5,962,083 | 7,037,492 | 1,075,409 | U | | | U |
| | | | | | | | | |
| Fixed costs | | | | | | | | |
| manufacturing overhead | | 658,897 | 661,920 | 3,023 | F | | | F |
| selling expenses | | 5,023,192 | 4,463,000 | (560,192) | U | | | U |
| administrative expenses | | 1,123,739 | 1,124,000 | 261 | F | | | F |
| total fixed costs | | 6,805,828 | 6,248,920 | (556,908) | U | | | U |
| Operating Income | | (843,745) | 788,572 | 1,632,317 | U | | | F |
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