Flexible Budget - Ex 3

P Q

PA * QA PB * QA PB * QB
Actual F. Budget Flexible Sales Vol Master
Results Variance Budget Variance Budget
Attendees 90 - 90 15 F 75
PB QA
$ $ $ $ $ $

Revenue 3,255 105 F 35 3,150 90 525 F 2,625 divide

2625/75 =
VC Chicken dinners 1,668 84 U 17.6 1,584 90 264 U 1,320 35. all items
VC Beverages 466 74 F 6 540 90 90 U 450
FC Club rental 81 - 81 81 1 - 81
fixed cost,
FC Music 840 120 U 720 720 1 - 720 quantity is
always 1
Profit 200 25 U 225 171 F 54

favorable variance is good (f)

unfavorable variance is bad (u)
Actual F. Budget Flexible Sales Vol Master
Results Variance Budget Variance Budget
Attendees 90 - 90 15 F 75

$ $ $ $ $

Revenue 3,255 105 F 3,150 525 F 2,625

Chicken dinners 1,668 84 U 1,584 264 U 1,320

Beverages 466 74 F 540 90 U 450
Club rental 81 - 81 - 81
Music 840 120 U 720 - 720

Profit 200 25 U 225 171 F 54

explain if favorable or unfavorable in the quiz

price ---- q
for sales
f-f = if selling price is more than the budgeted price, sales rev is higher; more units sold
u-u=variable cost is unfavorable, selling price is less than the budget, units is lower than the budget
f-u=could be favorable price (low price) more demand (more units sold)
u-f=could be unfavorable price (high price), less demand (less units sold) *economic relationship of supply and
demand (demand curve)

for costs
quality of raw material or quality or labor
increase quality = pay more
u for Price, favorable in materials

if cheap materials
F in price = unfavorable in materials