Douglas Company Provided the Following Budgeted Information for the Current

question 10

Essay

Douglas Company provided the following budgeted information for the current year.
$$\begin{array} { l r r } \text { Sales price } & \$ 50 \text { per unit } \\\text { Variable manufacturing cost } & 32 \text { per unit } \\\text { Fixed manufacturing cost } & \$ 100,000 \text { total } \\\text { Fixed selling and administrative cost } & \$ 40,000 \text { total }\end{array}$$ Douglas predicted that sales would be 20,000 units,but the sales actually were 22,000 units.The actual sales price was $48.50 per unit,and the actual variable manufacturing cost was $33 per unit.Actual fixed manufacturing cost and fixed selling and administrative cost were $104,000 and $39,000,respectively.
Required:
(a)Using the form below,prepare a flexible budget,show actual results,calculate the flexible budget variances,and indicate whether the variances are favorable (F)or unfavorable (U).
(b)Assess the company's performance compared to the flexible budget.

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Definitions:

Downsloping Demand

A situation where demand decreases as the price increases, typically illustrated by a downward sloping demand curve.

Upsloping Supply

This describes a supply curve that slants upward from left to right, indicating that the quantity of goods supplied increases as the price rises.

Consumer Income

The total earnings of consumers, including salary, wages, and other income sources, influencing their purchasing power.

Production Costs

The total expenses incurred in the manufacture of products or services, including labor, materials, and overhead.