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    Variance between flexible budget and actual results

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    Davis Company provides the following information budgeted for 2007.

    Sale price $50 by unit
    Cost to manufacture variable $32 by unit
    Fixed cost of manufacture $100,000
    Fixed cost of sales and administrative $40,000

    Davies predicted that the sales will be of 20.000 units, but the current sales were 22,000 units. The current price of sale was of $ 48,50 by unit, and the costs current variables of production were of $33 by unit. Current fixed costs of production and fixed costs of sale and administrative they were of $104.000 and $39.000, respectively.

    It required:

    A) To utilize the form that appears subsequently, prepare the flexible budget; to present the current results; to determine the varying of the flexible budget; to indicate if the differences are favorable (F) or unfavorable (D).

    Flexible Current Variance Favoralbe or
    budget results Budget Unfavorable

    1.Number of
    units Sales
    costs of
    4.Fixed costs
    of manufacture
    5.Fixed costs of
    sales and
    6.Net income

    B. to evaluate the performance of the business in comparison with the flexible budget

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    Solution Summary

    The answer contains the evaluation of the performance of the company by computing variance between the flexible budget and actual results.