Four Flags is a retail department store On January 1 2017 Fo

Four Flags is a retail department store. On January 1, 2017, Four Flags\' accountants used the following data to develop the master budget for Four Flags for 2017: Cost Cost of Goods Sold Selling and Promotion Expense Building Occupancy Expense Buying Expense Delivery Expense Credit and Collection Expense Fixed $0 $205,000 $180,000 $155,000 $100,000 $64,000 Variable (per unit sold) $5.40 $0.80 $0.20 $0.40 $0.10 $0.01 Expected unit sales in 2017 were 1,300,000, and 2017 total revenue was expected to be $13,000,000. Actual 2017 unit sales turned out to be 1,100,000, and total revenue was $11,000,000. Actual total costs in 2017 were Cost of Goods Sold Selling and Promotion Expense Building Occupancy Expense Buying Expense Delivery Expense Credit and Collection Expense $6,000,000 $1,000,000 $340,000 $530,000 $170,000 $35,000 Required Compute the flexible-budget variances in 2017 for the following two cost items (NOTE: enter favorable variances as positive numbers and unfavorable variances as negative numbers): Selling and Promotion Expense Buying Expense

Solution

flexible budget variance = actual - flexible budget Selling and promotion expense 1,000,000     - (205000+0.80*1,100,000) 85,000 F answer Buying expense 530,000 - (155000+ .40*1,100,000) 65,000 F Answer