Static Actual Flex Budget

BQ x BP AQ x AP AQ x BP
Units 10,000 8,000 8,000
Revenues 10,000 x $100 8,000 x $110 8,000 x $100
Less: Total Variable Costs
Direct Materials 10,000 x $12/unit 8,000 x $3.5/lb x 4lb/unit 8,000 x $12
Direct Labour 10,000 x $28/unit 18,000 hrs x $12/hr 8,000 x $28
Variable Manuf. OH. 10,000 x $8/unit $ 82,000 8,000 x $8

Total Variable Costs (10,000 x $48) ($410,000) (8,000 x $48)

Total Contribution Margin 10,000 x ($100-$48) $470,000 8,000 x ($100-$48)

Total Fixed Costs $ (160,000) $ (170,000) $ (160,000)

Operating Income $ 360,000 $ 300,000 $ 256,000

1.        Sales Volume Variance = $104,000U

2.        Sales Price Variance = $80,000F
3.        Market Size Variance = $208,000F
4.        Market Share Variance = $312,000U
5.        DM Price Variance = $16,000F
6.        DM Pure Price Variance = $12,000F
7.        DM Combined Price/Efficiency Variance = $4,000F
8.        DM Efficiency Variance = $32,000U
9.        DM Flexible Budget Variance = $16,000U
10.    DL Rate Variance = $36,000F
11.    DL Efficiency Variance = $28,000U
12.    DL Flexible Budget Variance = $8,000F
13.    VMOH Spending Variance = $34,000U
14.    VMOH Efficiency Variance = $16,000F
15.    VMOH Flexible Budget Variance = $18,000U = Under applied VMOH
16.    FMOH Spending Variance = FMOH Flexible Budget Variance = $10,000U = Underapplied FMOH
17.    FMOH Production Volume Variance = $32,000U
 Flex Budget Variance
|Actual - Flex Budget|
-
$80,000 F Favourable because actual revenue > flex bud rev.

$16,000 U because actual cost > flex bud cost for DM

$8,000 F because actual cost < flex bud cost for DL
$18,000 U

$26,000 U 16K U + 18K U versus 8K F is an overall unfavourable by

$26K. OR, Actual TVC > Flex Bud TVC by $26K

54000 F 80K F revenues vs 26K U TVC is an overall favourable by

54K. Or Actual CM > Flex Bud CM by $54K

$10,000 U because actual cost > flex bud cost for Fixed Costs

54,000 F CM vs 10K U TFC is an overall $44K F income. OR

$44,000 F
actual income > flex bud inc by $44K

rapplied FMOH