Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,030 units...

 

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Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,030 units for $838 each. During this month, the company incurred $412,000 total variable costs and $180,300 total fixed costs. The master budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 1,030 units. 2. Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. 3. Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable. Required 1 Required 2 Required 3 Prepare a flexible budget for the production and sale of 1,030 units. Units sold Sales Required 1 Required 2 Required 3 Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. Operating income Contribution margin Sales Volume Variance Show less Required 1 Required 2 Required 3 Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable. a. The total flexible budget variance b. The total variable cost flexible budget variance c. The total fixed cost flexible budget variance d. The selling price variance Show less Units Sales Variable costs Contribution margin Fixed costs 350,950 $ 288,650 160,650 Comparison of Actual and Budgeted Operating Income SCHMIDT MACHINERY COMPANY Analysis of Operating Income (1) For October 2022 Actual Operating Income 780 (2) Master Budget (3) Variances 1,000 220 U $ 639,600 100% $ 800,000 100% $ 160,400 U 55 450,000 56 99,050 F 45% $ 350,000 44% $ 61,350 U *** 25 150,000 19 10,650 U Operating income $ 128,000 20% $ 200,000 25% $ 72,000 U *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income. ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30,000. *Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000. Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,030 units for $838 each. During this month, the company incurred $412,000 total variable costs and $180,300 total fixed costs. The master budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 1,030 units. 2. Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. 3. Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable. Required 1 Required 2 Required 3 Prepare a flexible budget for the production and sale of 1,030 units. Units sold Sales Required 1 Required 2 Required 3 Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. Operating income Contribution margin Sales Volume Variance Show less Required 1 Required 2 Required 3 Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. c. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable. a. The total flexible budget variance b. The total variable cost flexible budget variance c. The total fixed cost flexible budget variance d. The selling price variance Show less Units Sales Variable costs Contribution margin Fixed costs 350,950 $ 288,650 160,650 Comparison of Actual and Budgeted Operating Income SCHMIDT MACHINERY COMPANY Analysis of Operating Income (1) For October 2022 Actual Operating Income 780 (2) Master Budget (3) Variances 1,000 220 U $ 639,600 100% $ 800,000 100% $ 160,400 U 55 450,000 56 99,050 F 45% $ 350,000 44% $ 61,350 U *** 25 150,000 19 10,650 U Operating income $ 128,000 20% $ 200,000 25% $ 72,000 U *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income. ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30,000. *Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000.