1282018 Student Syed Jaffry Date 012818 32 MyAccountinglab H

1/28/2018 Student: Syed Jaffry Date: 01/28/18 3-2 MyAccountinglab Homework: Chapters 22 and 23-Syed Jaffry Instructor: Abigail Feloney, Kelly Flannagan O\'Sullivan Assignment: 3-2 MyAccountinglab Course: ACC-202-T3852 Managerial Homework: Chapters 22 and 23 Accounting 18EW3 4. New Boston Technologies manufactures capacitors for cellular base stations and other communications applications. The company\'s July 2016 flexible budget shows output levels of 8,500, 10,000, and 12,000 units. The static budget was based on expected sales of 10,000 units. 1(click the icon to view the flexible budget.) The company sold 12,000 units during July, and its actual operating income was as follows: 2(Click the icon to view the income statement.) Read the requirements. Requirement 1. Prepare a flexible budget performance report for July. (Enter a \"0\" for any zero balances. For any SO variances, leave the Favorable (FVUnfavorable (u) input blank.) New Boston Technologies Flexible Budget Performance Report For the Month Ended July 31, 2016 (3) - (5) Budget Amounts Per Unit (1)-(3) Flexible Budget Variance Actual Results Flexible Budget Sales Volume Variance Static Budget Units Sales Revenue Variable Expenses Contribution Margin E 9 A TO E Fixed Expenses Operating Income (11) (12) |(13) |(14) (15) |(16) Requirement 2. What was the effect on New Boston\'s operating income of selling 2,000 units more than the static budget level of sales? Selling 2,000 units more than the static budget level of sales (17). New Boston\'s operating income by Requirement 3. What is New Boston\'s static budget variance for operating income? https://xlitemprod.pearsoncmg.com/api/v1/print/accounting 1/3

Solution

1.

2. Selling 2,000 units more than the static budget level of sales (17) increased New Boston\'s operating income by $24000.

3. New Boston\'s static budget variance is $24300 (18) favorable, meaning that its operating income is (19) higher than expected per the static budget.

4. (20) A favorable sales revenue flexible budget variance means the sale price was higher than planned.

(21) A favorable sales volume variance reveals whether profits increased due to more units being sold.

These variances suggest that the marketing department did a (22) good job. They sold (23) more units than expected and sold them at a (24) higher price than expected.

New Boston Technologies
Flexible Budget Performance Report
For the Month Ended July 31, 2016
		1	2 = (1) - (3)	3	4 = (3) - (5)	5
	Budget Amounts Per Unit	Actual Results	Flexible Budget Variance	Flexible Budget	Sales Volume Variance	Static Budget
Units		12000		12000		10000
Sales revenue	24	295000	7000	F	288000	48000	F	240000
Variable expenses	12	149200	5200	U	144000	24000	U	120000
Contribution margin		145800	1800	F	144000	24000	F	120000
Fixed expenses	53500	1500	U	52000	0		52000
Operating income	92300	300	F	92000	24000	F	68000
		(11) Flexible Budget Variance		(12) Sales Volume Variance
		300	F		24000	F
		(15) Static Budget Variance
				24300	F