# sol_Ch7 - Solutions for exercises on of lecture 7 Exercise...

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Solutions for exercises on slides 16, 17 of lecture 7 Exercise: Flexible budget (slide 16) 1. Variance Analysis for Alpha Company for January 2011 Actual Results (1) Flexible- Budget Variances (2) = (1) – (3) Flexible Budget (3) Sales-Volume Variances (4) = (3) – (5) Static Budget (5) Units sold 2,800 g 0 2,800 200 U 3,000 g Revenues \$313,600 a \$ 5,600 F \$308,000 b \$22,000 U \$330,000 c Variable costs 229,600 d 22,400 U 207,200 e 14,800 F 222,000 f Contribution margin 84,000 16,800 U 100,800 7,200 U 108,000 Fixed costs 50,000 g 4,000 F 54,000 g 0 54,000 g Operating income \$ 34,000 \$12,800 U \$ 46,800 \$ 7,200 U \$ 54,000 \$12,800 U \$ 7,200 U Total flexible-budget variance Total sales-volume variance \$20,000 U Total static-budget variance a \$112 × 2,800 = \$313,600 b \$110 × 2,800 = \$308,000 c \$110 × 3,000 = \$330,000 d Given. Unit variable cost = \$229,600 ÷ 2,800 = \$82 per unit e \$74 × 2,800 = \$207,200 f \$74 × 3,000 = \$222,000 g Given 2. Computing the variances directly: * static budget variance for operating income = actual OI – static budget OI =

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sol_Ch7 - Solutions for exercises on of lecture 7 Exercise...

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