Reference no: EM131815573

Question - 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.

a. Prepare a flexible budget based on actual revenue.

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

c. Comment briefly on XRC's overall performance. Examine the relationships among the variances and develop one question for the manager about the variances and their relationships.