Kool-Times installed nine pools during May. Prepare an income statement performance report for Kool-Time for May, using Exhibit 10-7 as a guide. Assume that the actual sales price per pool is $12,000, actual variable expenses total $61,000, and actual fixed expenses are $19,000 in May. The master budget was prepared with the following assumptions: variable cost of $8,000 per pool, fixed expenses of $20,000 per month, and anticipated sales volume of eight pools at $12,000 per pool.
In exhibit

Requirement
Compute the sales volume variance and flexible budget variance. Use these variances to explain to Kool-Time€™s management why May€™s operating income differs from the operating income shown in the static budget.

Transcribed Image Text:

KOOL-TIME POOLS Income Statement Performance Report Month Ended June 30 (1)-(3) Flexible (3)-(5) Budget Results Flexiblefor Actual SalesStatic at Actual Budget Number ofolume(Master) Prices Vaiance Output Units Variance Budget Actual Output units (pools installed) 10 -0 10 $121.000 l s 1.000 F || is 24.000 FI $96,000 Sales revenue Variable expenses Fixed expenses Total expenses Operating income $120.000 83,0003,000 U 22,0002,000 U 105,000 5.000 U1 16,000 4,000 US 20,000 80,000 | 16,000 U 64,000 20,000 20,000 16,000 UI 84,000 8,000 F $12,000 100,000 Flexible budget variance, $4,000 LT Sales volume variance, $8,000 F Static budget variance, $4,000 F