The following information is available for Brownstone Products Company for the month of July:

Required

1. What was the total operating income variance for July, rounded to the nearest whole dollar? Was this variance favorable (F) or unfavorable (U)?

2. Set up a spreadsheet to compute the July sales volume variance and the flexible-budget variance for the month, both in terms of contribution margin and in terms of operating income. Round all dollar amounts to the nearest whole number.

3. Discuss implications of these variances on strategic cost management for Brownstone.

4. Configure your spreadsheet so that it will allow the firm to prepare pro-forma budgets for activities within its relevant range of operations. Use your spreadsheet to prepare a flexible budget for each of the following two output levels (round all dollar amounts in the flexible budgets to the nearest whole number):

a. 3,750 units.

b. 4,150 units.

Transcribed Image Text:

Master Budget 4,000 Actual Units Sales revenue Variable manufacturing costs 3,800 $53,200 $60,000 16,000 15,000 Fixed manufacturing costs 16,000 Variable selling and administrative expenses Fixed selling and administrative expenses 7,700 8,000 10,000 9,000