Question 14 (12 points)

Question

Using the data below, answer the following questions:

a. What values go in the Flexible Budget column of the following table? Please provide values for all cells indicated with letters (U, V, W, X, Y, Z) - 6 marks

10a. Flexible Budget Table

Budget

Actual

Units sold

4,000

4,800

Flexible

Budget

U

Sales

Variable costs

Contribution margin

Fixed costs

$200,000

120,000

80,000

14,000

$66,000

$249,600

139,200

110,400

14,800

$95,600

<

Z

1. Using the flexible budget, what is the dollar value of variable cost variance and is it favourable or unfavourable? (2 marks)
2. Using the flexible budget, what is the dollar value of Fixed cost variance and is it favourable or unfavourable? (2 marks)
3. Provide in one brief sentence, a possible and reasonable explanation for the variable cost variance. (1 mark)
4. Provide in one brief sentence, a possible and reasonable explanation for the fixed cost variance. (1 mark)