Budgeted and Actual Income Statement Data for XRC Corp

question 120

Essay

Budgeted and actual income statement data for XRC Corp., which sells clerical clothing and supplies, appear below:
Budgeted Actual
Revenue $85,000 $80,750
Variable manufacturing costs 13,000 12,500
Fixed manufacturing costs 5,000 5,200
Variable selling expenses 22,000 19,000
Fixed selling expenses 3,000 3,100
Administrative expenses 7,000 7,000
Operating income $35,000 $33,950
The difference between the actual and budgeted amounts of revenue was created by differences between expected and actual unit sales.
a)Prepare a flexible budget based on actual revenue.
b)Calculate budget variances and indicate whether each variance is favourable or unfavourable.
c)Comment briefly on XRC's overall performance. Examine the relationships among the variances and develop one question for the manager about the variances and their relationships.

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Definitions:

Relationship Conflict

Disagreements and clashes between individuals due to personal issues, values, or emotions rather than task or work-related issues.

Process Conflict

A type of conflict that arises from differences in understanding and managing methods, procedures, and expectations in team or organizational tasks.

Member Satisfaction

The level of contentment experienced by individuals who are part of a group, organization, or community, typically reflecting the degree to which their expectations and needs are met.

Team Performance

The level of productivity or success achieved by a group of individuals working together towards common goals.