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Problem
Hanno had the following static budget for March, when it expected to sell 4,000 sandwiches:
Sales revenue $ 48,000Variable costs $ 28,000Fixed costs $ 5,000Net income $15,000
Hanno actually sold 5,000 sandwiches during March at $12 each. Variable costs were $37,500 and fixed costs were $4,800.
A. Prepare a flexible budget at for March that will help Hanno separate the volume variance from the flexible budget variance. Make your income statement match my format and compute net income.
B. What is the volume variance for variable costs?
C. What is the flexible budget variance for variable costs?
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