Reference no: EM131729670

Budgeted and actual income statement data for XRC Corp., which sells clerical clothing and supplies, appear below:

Budgeted Actual
Revenue $ 85,000 $ 80,750
Variable manufacturing costs 13,000 12,500
Fixed manufacturing costs 5,000 5,200
Variable selling expenses 22,000 19,000
Fixed selling expenses 3,000 3,100
Administrative expenses 7,000 7,000
Operating income $ 35,000 $ 33,950

The difference between the actual and budgeted amounts of revenue was created by differences between expected and actual unit sales.

Prepare a flexible budget based on actual revenue.

Calculate budget variances and indicate whether each variance is favorable or unfavorable.