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

Required

1. Set up a spreadsheet to compute the July sales volume variance and the flexible-budget variance for the month in terms of both contribution margin and operating income.

2. Discuss implications of these variances on strategic cost management for Mitchelville.

3. Create an electronic spreadsheet that will allow the firm to prepare pro forma budgets for activities within its relevant range of operations and prepare flexible budgets when sales are:

a. 3,800 units.

b. 4,100 units.

Transcribed Image Text:

Master Budget Actual Units 3,800 4,000 Sales revenue $53,200 $60,000 Variable manufacturing costs 19,000 16,000 Fixed manufacturing costs 16,000 15,000 Variable selling and administrative expenses 7,700 8,000 Fixed selling and administrative expenses 10,000 9,000