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    Budget variance including flexible budget

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    Tylon's Hardware uses a flexible budget to develop planning information for its warehouse operations. For 20X9, the company anticipated that it would have 96,000 sales units for 664 customer shipments. Average storage bin usage for various inventories was estimated to be 200 per day. The costs and cost drivers were determined to be as follows:

    Item Fixed Variable Cost Driver
    Product Handling $10,000.00 $1.25 per 100 units
    Storage $3.00 per storage bin
    Utilities $1,000.00 $1.50 per 100 units
    Shipping Clerks $1,000.00 $1.00 per shipment
    Supplies $0.50 per shipment

    During the year, the warehouse processed 90,000 units for 600 customer shipments. The workers used 225 storage bins on average each day to sort, store, and process goods for shipment. The actual costs for 20X9 were:

    Item Actual Cost
    Product handling $10,900
    Storage $465
    Utilities $2,020
    Shipping Clerks $1,400
    Supplies $340

    1: Determine the 20X9 static budget variances.

    2: Determine the 20X9 flexible budget variances

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    Solution Summary

    Static budget
    Flexible budget
    Static budget variance
    Flexible budget variance