Problem
Daytec Company's fixed budget performance report for June follows. It's not done correctly! The Variances show the differences between the Fixed Budget (6,000 units) and the Actual Results (4,800 units). They have "mixed apples and oranges". Using the following additional information, you are to compute the CORRECT variances (between the Flexible Budget and the Actual Results).
The $440,000 budgeted expenses include $300,000 variable expenses and $140,000 fixed expenses. Actual expenses include $130,000 fixed expenses. Prepare a flexible budget performance report showing any variances between budgeted and actual results.
Daytec Company Fixed Budget Performance Report
(Variances are incorrectly calculated! This is NOT the way to do it)
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Fixed Budget
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Actual Results
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Variances
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Sales (in units)
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6,000
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4,800
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Sales (in dollars)
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$480,000
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$422,400
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$57,600U
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Total expenses
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440,000
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394,000
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46,000F
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Income from operations
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$40,000
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$28,400
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$11,600U
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Daytec Company Flexible Performance Report
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Master (Fixed)
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Flexible
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Flexible
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Budget
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Budget
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Actual
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Budget
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_____units
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_____units
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units
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Variances
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Sales
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-Var Cost
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Margin
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-FC
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Income
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• What is net income for the master budget?
• What is net income fro the flexible budget?
• What is actual net income?
• What is the total flexible budget variance?