Using the data from the Ace Guitar Company, determine the divisional income from operations for the A and B regions.
Allocate service department expenses proportional to the sales of each region. Round percentage of sales allocation to one decimal place.
Definitions:
Spending Variance
The difference between the actual amount of the cost and how much the cost should have been, given the actual level of activity. A favorable (unfavorable) spending variance occurs because the cost is lower (higher) than expected, given the actual level of activity for the period.
Static Planning Budget
A projection of budget figures based on a fixed level of activity or volume, not adjusted for changes.
Flexible Budget
A budget that adjusts or varies with changes in the volume of activity, revenue, or other factors affecting budgetary needs.
Performance Reports
Documents that compare actual results to planned or budgeted performance in order to assess how well a company or department is operating.
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