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Chapter 11 in class mark up-2

The document presents a flexible budget for Heat Fast Inc, detailing revenues, variable costs, fixed costs, and income from operations for different sales volumes. It includes a price sensitivity analysis and variance reports comparing actual performance to budgeted figures across various categories such as direct materials, labor, and overhead. Overall, the analysis highlights areas of favorable and unfavorable variances, providing insights into the company's financial performance.

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13 views15 pages

Chapter 11 in class mark up-2

The document presents a flexible budget for Heat Fast Inc, detailing revenues, variable costs, fixed costs, and income from operations for different sales volumes. It includes a price sensitivity analysis and variance reports comparing actual performance to budgeted figures across various categories such as direct materials, labor, and overhead. Overall, the analysis highlights areas of favorable and unfavorable variances, providing insights into the company's financial performance.

Uploaded by

lnqnhu0902
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 15

Heat Fast Inc

Flexible Budget

Cost per
unit 90,000 100,000
Revenues $ 12.00 $ 1,080,000 $ 1,200,000

Variable costs
Manufacturing $ 7.00 $ 630,000 $ 700,000
Administrative $ 2.00 $ 180,000 $ 200,000
Selling $ 1.00 $ 90,000 $ 100,000
total variable cost $ 10.00 $ 900,000 $ 1,000,000
Contribution Margin $ 180,000 $ 200,000

Fixed Costs
Manufacturing $ 100,000 $ 100,000
Administrative $ 80,000 $ 80,000
total fixed costs $ 180,000 $ 180,000

Total cost $ 1,080,000 $ 1,180,000


Income from operations $ - $ 20,000

Price Sensitivity Analysis

Cost how much sold


$3 1000000
$3.50 975000
$4 875000
$4.50 650000
110,000
$ 1,320,000

$ 770,000
$ 220,000
$ 110,000
$ 1,100,000
$ 220,000

$ 100,000
$ 80,000
$ 180,000

$ 1,280,000
$ 40,000

Profit/Sales
$3,000,000
$3,412,500 3.55
$3,500,000 3.65
$2,925,000
Actual Flexible budget
Flexible budget
(pure actual) variance (Hybrid)
Sales (units) 9,600 - 9,600
Revenue $ 278,400 $ 9,600 U $ 288,000
Variable expenses/costs $ 240,000 $ 19,200 U $ 220,800

Contribution margin $ 38,400 $ 28,800 U $ 67,200


Fixed expenses $ 18,000 $ 1,000 F $ 19,000
Income $ 20,400 $ 27,800 U $ 48,200

Matt notes on Flexible Budget column:


Your Flexible budget, uses your ACTUAL sales QUANTITY, but your BUDGETED(static) costs and sales pric
Static variance - compares Static budget Vs Actual budget
PETE INC
Performance Report - Static Budget
Sales volume
Static Budget
variance (pure budget) Static variance
600 9,000
$ 18,000 F $ 270,000 $ 8,400 F
$ 13,800 U $ 207,000 $ 33,000 U

$ 4,200 F $ 63,000 $ 24,600 U


$ - F $ 19,000 $ 1,000 F
$ 4,200 F $ 44,000 $ 23,600 U

ED(static) costs and sales price


1) *Could be on exam!

Actual Flexible Budgeted


AQ x AP AQ x SP SQ x SP
PRICE V QUANTITY V
AQ 9,000 Given
AP $ 2.20 Given
SQ 8,400 Little calculation
SP $ 2.00 Given

Direct Materials Price and Quantity Variance


Actual Flexible Budgeted
AQ x AP AQ x SP SQ x SP
$ 19,800.00 Actual- Flex $ 18,000.00 Flex - Budget $ 16,800.00
$ 1,800.00 $ 1,200.00
PRICE VARIANCE QUANTITY VARIANCE
Unfavourable Unfavourable
$ 3,000.00
Total variance
Unfavourable

2) Direct Labour rate and effciency variances *Could be on exam!

Direct Labour rate and effciency variances


Actual Flexible Budgeted
AH x AR AH x SR SH x SR
$ 9,265.00 $ 10,200.00 $ 9,600.00
-$ 935.00 $ 600.00
Rate Variance Efficiency Variance
Favourable Unfavourable
-$ 335.00
Total variance
Favourable

3) Variable Overhead variances

Variable Overhead variances


Actual Flexible Budgeted
AQ x AR AQ x SR SQ x SR
$ 1,650.00 $ 1,700.00 $ 1,600.00
-$ 50.00 $ 100.00
Spending variance Efficiency Variance
Favourable Unfavourable
$ 50.00
Total variance
Unfavourable

4)
Actual Flexible Budgeted
AQ x AR AQ x SR SQ x SR
$ 15,890.00 $ 15,800.00 $ 15,800.00
$ 90.00 $ -
Spending variance Efficiency Variance
Unfavourable NIL
$ 90.00
Total variance
Unfavourable

Calculate Overhead variance:


5) Fixed Variance $ 90.00 U
Variable variance $ 50.00 U

Total Variance $ 140.00 U


AQ 9,000
AP $ 2.20
SQ 8,400
SP $ 2.00
SQ: units x SQ

AH 850 AH 850 Given


AR $ 10.90 AR $ 10.90 (not needed, small calc)
SR $ 12.00 SR $ 12.00 Given
SH 800 SH 800 Little calculation

AQ 850 AQ 850 Given


AR $ 1.94 AR $ 1.94 (not needed, small calc)
SR 2 SR 2 Given
SQ 800 SQ 800 Given

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