Douglas Company provided the following budgeted information for the current year.
$$\begin{array} { l r r }
\text { Sales price } & \$ 50 \text { per unit } \
\text { Variable manufacturing cost } & 32 \text { per unit } \
\text { Fixed manufacturing cost } & \$ 100,000 \text { total } \
\text { Fixed selling and administrative cost } & \$ 40,000 \text { total }
\end{array}$$ Douglas predicted that sales would be 20,000 units,but the sales actually were 22,000 units.The actual sales price was $48.50 per unit,and the actual variable manufacturing cost was $33 per unit.Actual fixed manufacturing cost and fixed selling and administrative cost were $104,000 and $39,000,respectively.
Required:
(a)Using the form below,prepare a flexible budget,show actual results,calculate the flexible budget variances,and indicate whether the variances are favorable (F)or unfavorable (U).
(b)Assess the company's performance compared to the flexible budget.

Question

Douglas Company provided the following budgeted information for the current year.
 $$\begin{array} { l r r } 
\text { Sales price } & \$  50 \text { per unit } \
\text { Variable manufacturing cost } & 32 \text { per unit } \
\text { Fixed manufacturing cost } & \$ 100,000 \text { total } \
\text { Fixed selling and administrative cost } & \$ 40,000 \text { total }
\end{array}$$ Douglas predicted that sales would be 20,000 units,but the sales actually were 22,000 units.The actual sales price was $48.50 per unit,and the actual variable manufacturing cost was $33 per unit.Actual fixed manufacturing cost and fixed selling and administrative cost were $104,000 and $39,000,respectively.
Required:
(a)Using the form below,prepare a flexible budget,show actual results,calculate the flexible budget variances,and indicate whether the variances are favorable (F)or unfavorable (U).
  (b)Assess the company's performance compared to the flexible budget.

Quizplus · Accepted Answer

The Answer of Douglas Company provided the following budgeted information for the current year.
 $$\begin{array} { l r r } 
\text { Sales price } & \$  50 \text { per unit } \
\text { Variable manufacturing cost } & 32 \text { per unit } \
\text { Fixed manufacturing cost } & \$ 100,000 \text { total } \
\text { Fixed selling and administrative cost } & \$ 40,000 \text { total }
\end{array}$$ Douglas predicted that sales would be 20,000 units,but the sales actually were 22,000 units.The actual sales price was $48.50 per unit,and the actual variable manufacturing cost was $33 per unit.Actual fixed manufacturing cost and fixed selling and administrative cost were $104,000 and $39,000,respectively.
Required:
(a)Using the form below,prepare a flexible budget,show actual results,calculate the flexible budget variances,and indicate whether the variances are favorable (F)or unfavorable (U).
  (b)Assess the company's performance compared to the flexible budget.

Douglas Company Provided the Following Budgeted Information for the Current