Compute the flexible-budget variances


Four Flags is a retail department store. On January 1, 2012, Four Flags' accountants used the following data to develop the master budget for Four Flags for 2012:

  • Cost of goods sold $0 $5.60
  • Selling and promotion expense $220,000 $0.80
  • Building occupancy expense $190,000 $0.10
  • Buying expense $145,000 $0.30
  • Delivery expense $100,000 $0.10
  • Credit & Collection expense $70,000 $0.03

Expected unit sales in 2012 were 1,300,000, and 2012 total revenue was expected to be $13,000,000. Actual 2012 unit sales turned out to be 1,000,000, and total revenue was $10,000,000. Actual costs in 2012 were:

  • Cost of goods sold $6,000,000
  • Selling and promotion expense $1,000,000
  • Building occupancy expense $450,000
  • Buying expense $610,000
  • Delivery expense $180,000
  • Credit & Collection expense $60,000

Compute the flexible-budget variances for the following two cost items (enter favorable variances as positive numbers and unfavorable variances as negative numbers).

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Compute the flexible-budget variances
Reference No:- TGS0683785

Expected delivery within 24 Hours