Reference no: EM132782127

Net operating income for the Bardol Company for 2018 was:

Sales (45,000 units) $450,000

Cost of goods sold:

Direct materials $ 90,000

Direct labor 67,500

Variable overhead 27,000

Fixed overhead 45,000

$229,500

Gross margin $220,500

Selling and administrative expenses:

Fixed $140,500

variable 27,000

167,500

Net operating income $ 53,000

To prepare the budget for 2019, sales are forecasted at a 20% volume increase with no change in sales price or variable costs per unit. Fixed overhead was budgeted to be $45,000. Fixed selling and administrative expenses are budgeted to increase by $4,500. Sales and production volume are expected to be equal, and there are no beginning or ending inventories of work in process or finished goods.

The actual operating data for 2019 are:

Sales ($10 per unit) $520,000

Direct materials 105,750

Direct labor 78,750

Variable overhead 30,376

Fixed overhead 46,124

Variable selling and administrative expenses 31,050

Fixed selling and administrative expenses 145,428

Question a. how do you prepare a report comparing the master 2019 operating budget with actual data for 2019. Do not calculate budget variances.

Question b. how do you prepare a budget report comparing flexible operating budget amounts with actual data for 2019. Assume actual units produced equal the budgeted production from part a. Calculate and label budget variances.