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The Clarkson Company produces engine parts. An intern accidentally deleted variance analysis calculations for 2017. The remaining data shows actual results were 130,000 units sold for $715,000 in revenues and $515,000 in variable costs. The flexible budget predicted 130,000 units for $455,000 revenues and $260,000 variable costs. Actual selling price was $5.50 and budgeted was $3.50. Actual variable cost per unit was $3.96 and budgeted was $2.00.

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33 views

CH 07B (Empty)

The Clarkson Company produces engine parts. An intern accidentally deleted variance analysis calculations for 2017. The remaining data shows actual results were 130,000 units sold for $715,000 in revenues and $515,000 in variable costs. The flexible budget predicted 130,000 units for $455,000 revenues and $260,000 variable costs. Actual selling price was $5.50 and budgeted was $3.50. Actual variable cost per unit was $3.96 and budgeted was $2.00.

Uploaded by

Riley Care
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
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Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible budget, working backward

The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accid
company’s variance analysis calculations for the year ended December 31, 2017. The partial table of what remains o
provided below.

Use the blue shaded areas for inputs.


Always use cell references and formulas where appropriate to receive full credit.

Requirements
1 Calculate all the required variances. (If your work is accurate, you will find that the total static-budget variance
a. Enter all amounts as positive values. Do NOT use parentheses or a minus sign for amounts to be subtracted
b. Use the ABS function when calculating variances, and use the drop-down selections for F or U when descri
c. For variances with a zero amount, make sure to enter the result of "=0" in the appropriate cell and leave th
the variance as either F or U blank.
2 What are the actual and budgeted selling prices? What are the actual and budgeted variable costs per unit?

1. Calculate all the required variances. (If your work is accurate, you will find that the total static-budget variance
(Always use cell references and formulas where appropriate to receive full credit.)

Actual Results Flexible-Budget Variance* Flexible Budget


Units sold 130,000 0 130,000
Revenues $ 715,000 $ 260,000 F $ 455,000
Variable costs $ 515,000 $ 255,000 U $ 260,000
Contribution margin $ 200,000 $ 5,000 F $ 195,000
Fixed costs $ 140,000 $ 20,000 U $ 120,000
Operating income $ 60,000 $ 15,000 U $ 75,000

2. What are the actual and budgeted selling prices? What are the actual and budgeted variable costs per unit?
(Always use cell references and formulas where appropriate to receive full credit.)

Actual selling price $5.50


Budgeted selling price $3.50
Actual variable cost per unit $3.96
Budgeted variable cost per unit $2.00
nt intern at Clarkson has accidentally deleted the
partial table of what remains of the data has been

he total static-budget variance is $0.)


n for amounts to be subtracted.
ections for F or U when describing the variances.
e appropriate cell and leave the drop-down to identify

ted variable costs per unit?

e total static-budget variance is $0.)

Sales-Volume Variances* Static Budget *Variances should be presented as positive numbers using th
10,000 F 120,000
$ 35,000 F $ 420,000 $ 3.50
$ 20,000 U $ 240,000 $ 2
$ 15,000 F $ 180,000 $ 1.50
$ - $ 120,000 $ 1
$ 15,000 F $ 60,000 $ 0.50

ed variable costs per unit?


ed as positive numbers using the ABS function.
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