What was the actual operating income for the period

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Master (Static) Budget Variance and Components As the new accountant for B&B, Inc., you've been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the company's sole product.


Actual

Master (Static) Budget

Units sold

40,000

45,000

Sales

$390,000

$450,000

Variable costs

$220,000

$270,000

Fixed costs

$140,000

$138,000

Required

1. What was the actual operating income for the period?

2. What was the company's master budget operating income for the period?

3. What was the total master (static) budget variance, in terms of operating income, for the period? Is this variance favorable (F) or unfavorable (U)? Why?

4. From the information given above, are you able to decompose the total master (static) budget variance into a total flexible-budget variance and a sales volume variance? Why or why not?

5. Define the meaning of the total flexible-budget variance and the sales volume variance.

Reference no: EM13877003

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