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Question - The ABC Company sells holiday packages. One particular package, a nine-day rafting trip, had budgeted revenue for 2011 of 110 packages at $900 per package. The Flexible Budget amount for Revenues was $72,000 (based on the actual sales volume). The actual sales price for each of these packages was $875.
Variable costs were budgeted at $600 per package. Due to using a better and more experienced rafting guide, the actual total variable costs for 2011 was $43,000. Actual fixed costs were $3,000 less than the budgeted value of $13,000.
Required: Using a Flexible Budget (Level 2) analysis, calculate the Flexible Budget Variance and the Sales Volume Variance for each of the following. Please state if variances are favourable or unfavorable.
1. Revenue
2. Variable Costs
3. Fixed Costs
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