Top managers of Preston Industries predicted 2018 sales of 14900 units of its product at a unit price of $6. Actual sales for the year were 14,800…

Top managers of Preston Industries predicted 2018 sales of 14900 units of its product at a unit price of $6.50. Actual sales for the year were 14,800 units at $8.50 each. Variable costs were budgeted at $2.40 per unit, and actual variable costs were $2.50 per unit. Actual fixed costs of $46,000 exceeded budgeted fixed costs by $5,500.

Prepare Preston’s flexible budget performance report. What variance contributed most to the year’s favorable results? what caused this variance?

Prepare: flexible budget performance report for the year. First, complete the flexible budget performance report through the contribution margin line, then complete the report through the operating income line. Finally, compute the total variances (Enter a “0” for any zero balances. For any $0 variances, leave the Favorable (F) unfavorable (U) input blank)

                                                                                           Preston Industries

                                                                   Flexible Budget Performance Report

                                                                For the year Ended December 31, 2018

                                                              1                           2                                  3                              4                                     5

                                                                                      (1) – (3)                                                             (3) – (5)

____________________________________________________________________________________________________________________

                                    Budget                                     Flexible                                                                Sales

                                     Amounts        Actual               Budget                         Flexible                            Volume                      Static

                                    Per unit          Results             Variance                      Budget                            Variance                     Budget

_____________________________________________________________________________________________________________________

Units                                               ____________                                           _______________                                           ______________

_____________________________________________________________________________________________________________________

Sales Revenue          _______      __________      _________ __                 ______________     ___________ __             _________________

Variable Costs          _______      __________      _________ __                  ______________     ___________ __            _________________

Contribution Margin                      __________      _________ __                 ______________     ___________ __            _________________

Fixed Costs                                   __________      _________ __                  ______________     ___________ __            _________________

Operating Income                         __________       _________ __                 ______________      ___________ __            _________________

                                                           Flexible Budget Variance                                                             Sales Volume Variance

                                                            $ ____________ __                                                                     $  __________ __

                                                       ________________________________________________________________________

                                                                                                      Static Budget Variance

                                                                                                     $ _________________ __

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