What was the actual operating income for the period what

Question

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.

Answer 1

Provide answer to the following questions regarding budget operating income. The task must require showing the whole computation part in a word paper using APA rule. As the new accountant for B&B, Inc., you have ve been asked to give a succinct assessment of financial performance for the year just ended. You acquire the given information which pertains to the sole product of the company. Q1. Determine the actual operating income for the period? Q2. Determine the company's master budget operating income for the period? Q3. Determine the total master (static) budget variance, in terms of the operating income, for the period? Is this variance favorable or unfavorable? Illustrate why? Q4. From the information provided above, are you capable to decompose the total master (static) budget variance to a total flexible-budget variance and the sales volume variance? Explain why or why not? Q5. State the meaning of the total flexible-budget variance and the sales volume variance.