Question 23.1: A manufacturing company reports the following fixed budget a...

Fundamental Accounting Principles

A manufacturing company reports the following fixed budget and actual results for the past year. The fixed budget assumes a selling price of $40 per unit. The fixed budget is based on 20,000 units of sales, and the actual results are based on 24,000 units of sales. Prepare a flexible budget performance report for the past year. Label variances as favorable (F) or unfavorable (U).

	Fixed Budget (20,000 units)	Actual Results (24,000 units)
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$800,000	$972,000
Variable costs* . . . . . . . . . . . . . . . . . . . . .	160,000	240,000
Fixed costs . . . . . . . . . . . . . . . . . . . . . . . .	500,000	490,000

*Budgeted variable cost per unit = $160,000∕20,000 = $8.00.

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