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The management of Rooney Modems, Inc. (RMI) is uncertain as to the volume of sales...

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Accounting

The management of Rooney Modems, Inc. (RMI) is uncertain as to the volume of sales that will exist in 2017. The president of the company asked the chief accountant to prepare flexible budget income statements assuming that sales activity amounts to 7,000 and 11,000 units. The static budget is shown in the form below.

Required

a) Complete the following worksheet to prepare the appropriate flexible budgets.

b) Calculate and show the flexible budget variances for the static budget versus the flexible budget at 11,000 units.

c) Indicate whether each variance is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

image

ROONEY MODEMS, INC. Flexible Budget Income Statements Cost per unit Static Budget Flexible Budgets Volume Variance Number of units 9,000 7,000 11,000 20 1.080,000 Sales revenue Variable manufacturing costs Materials Labor Overhead 45 405,000 30 270,000 54,000 72,000 279,000 Variable selling, general & administrativee Contribution margin Fixed costs Manufacturing rent Depreciation on manufacturing equipment Selling, general & administrative expenses Depreciation on administrative equipment 63,000 73,000 92,100 25,000 Net income (loss) $ 25,900$(36,100)$ 87,900

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