Instructions:

Use the information from this sheet to complete the spreadsheet found on the STUDENT tab.

RockChuck Company manufactures mountain bikes and has provided the following information for September $20$XX:

Static Budget

Units $2,000$

Sales Price $$795$

Variable Cost$/$unit $$500$

Fixed Costs $$500,000$

Actual Results

Units $1,500$

Sales Revenue $$1,215,000$

Variable Costs $$742,500$

Fixed Costs $$425,000$

$1.$ Prepare a flexible budget performance report.

a$.$ Compute operating income based on the static budget

b$.$ Compute the flexible budget based on actual units

c$.$ Compute operating income based on actual results

d$.$ Compute the flexible budget variances as absolute values and label them as F $($favorable$)$ or U $($unfavorable$)$

e$.$ Compute the sales volume variances as absolute values and label them as F $($favorable$)$ or U $($unfavorable$)$

$2.$ Calculate the overall budget variance for operating income, and label it as F $($favorable$)$ or U $($unfavorable$)$ variance.

$3.$ Explain these variances to your management team.

RockChuck Company manufactures mountain bikes and has provided the following information for September $2021$:

Actual Results Static Budget

Units

Sales Revenue

Variable Costs

Fixed Costs

Requirements

$1$ Prepare a flexible budget performance report, including the heading. Use the ABS function when calculating variances, and use the drop$-$down selections for F or U when describing the variances.

Column $1$ Column $2$ Column $3$ Column $4$ Column $5$

Col $(1)-$ Col $(3)$ Col $(3)-$ Col $(5)$

Actual Amounts per Unit Actual Results Flexible Budget Variance F or U Flexible Budget Sales Volume Variance F or U Static Budget Budgeted Amounts per Unit

Units $--$

Sales Revenue

Variable Costs

Contribution Margin

Fixed Costs

Operating Income

$2$ Calculate the overall budget variance for operating income, and label it as a F $($favorable$)$ or U $($unfavorable$)$ variance.

Flexible budget variance

Sales volume variance

Static Budget Variance for Operating Income $(1)-(5)$

Amount:

F or U

$3$ Explain these variances to your management team.