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Make a flexible budget comparing the actual results

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Reference no: EM132529069

Actual income statement information for 2015 is as follows:

Sales $3,500,000

Direct materials $500,000

Direct labor $400,000

Variable overhead $300,000

Fixed costs $600,000

Operating income $1,700,000

Question A. Make a budget for 2016 assuming sales and variable costs increase by 30% and fixed costs increase by $200,000

Actual results for 2016 were as follows:

Sales $3,200,000

Direct materials $480,000

Direct labor $380,000

Variable overhead $385,000

Fixed costs $600,000

Operating income $1,355,000

Question B. Make a flexible budget comparing the actual results for 2016 with the flexible budget for 2016

Question C. Calculate the variances for each line item in the budget in both dollar and percentage terms

Question D. Comment on the variances

Reference no: EM132529069

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