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Xion Co. budgets a selling price of $80 per unit, variable costs of $35 per unit, and total fixed costs of $270,000. During June, the company produced and sold 10,800 units and incurred actual variable costs of $351,000 and actual fixed costs of $285,000. Actual sales for June were $885,000. Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance) XION CO. Flexible Budget Report For Month Ended June 30 Flexible Budget Actual Results Variances Fav./Unf.

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Answer:

FLEXIBLE BUDGET REPORT

                                       Flexible budget      Actual        Variance                  

Activity level (units)          10,800                  10,800         No variance

                                             $                           $

Sales                                 864,000              885,000    21,000(F)                  

Less: Variable cost:

Total variable cost            378,000               351,000    27,000(F)

Less: Fixed cost:                                                                                                                                                                                                                                                                                                      

Total fixed cost                 270,000               285,000   15,000(U)

Profit                                 216,000               249,000  33,000(U)

Explanation:

In this report, the budgeted total variable cost is obtained by multiplying the variable cost per unit by the quantity of goods produced and sold.

The total fixed cost remains constant regardless of the quantity produced and sold.

Variance is the difference between the flexible budget and actual results.                                                                              

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