The static budget for XYZ company is as follows Units 10000

The static budget for XYZ company is as follows:

Units 10,000

revenue 80,000

variable costs 50,000

fixed costs 10,000

profit 20,000

Actual results are :

units 8000

revenue 64,000

variable cost 11000

profit 11,000

prepare a flexible budget for 8000 units. compute flexible budget and sales activity variances.

Solution

Flexible Budget

Sales $ 64000

Variable Cost $ 40000

Fixed Cost $ 10000

Profit $ 14000

Sales activity variance : Budgeted - Actual = $ 80000 - $ 64000 = $ 16000 (U)