Question 50:
The Phipps Company produces and sells over 100 different products. For the past year, the master budget called for:
Sales (70,000 units) $420,000
Variable costs 140,000
Contribution margin $280,000
Fixed costs 200,000
Net income $ 80,000
At the end of the year, the subsequent flexible budget was prepared based on the actual products sold:
Sales (72,000 units) $446,400
Variable costs 216,000
Contribution margin $230,400
Fixed costs 200,000
Net income $ 30,400
The actual income statement for the period revealed:
Sales (72,000 units) $442,800
Variable costs 219,600
Contribution margin $223,200
Fixed costs 210,000
Net income $ 13,200
Required:
Reconcile master budget to actual total income by calculating a sales mix variance, sales quantity variance, selling price variance (in total), variable cost variances, and a fixed cost budget variance.