Bank Management Printers Inc. produces luxury chequebooks with three cheques and stubs per page. Each chequebook is designed for an individual customer and is ordered through the customer€™s bank. The company€™s operating budget for September 2013 included these data:

The executive vice-president of the company observed that the operating income for September was much less than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. You have been asked to provide explanations for the disappointing September results.
Bank Management develops its flexible-budget-based budgeted revenue per output unit and variable costs per output unit without a detailed analysis of budgeted inputs.
REQUIRED
1. Prepare a Level 1 analysis of the September performance.
2. Prepare a Level 2 analysis of the September performance.
3. Why might Bank Management find the Level 2 analysis more informative than the Level 1 analysis? Explain your answer.

Transcribed Image Text:

15,000 $ 20 Number of chequebooks Selling price per book Variable costs per boolk Total fixed costs for the month $145,000 The actual results for September 2013 were Number of chequebooks produced and sold Average selling price per book Variable costs per boolk Total fixed costs for the montlh 12,000 $ 21 $150,000