Davies Company Provided the Following Budgeted Information for 2012 Davies Predicted That Sales Would Be 20,000 Units, but the

question 57

Essay

Davies Company provided the following budgeted information for 2012. $$\begin{array} { | l | r | } \hline \text { Sales price } & \$ 50 \text { per unit } \\\hline \text { Variable manufacturing cost } & 32 \text { per unit } \\\hline \text { Fixed manufacturing cost } & \$ 100,000 \text { total } \\\hline \text { Fixed selling and administrative cost } & \$ 40,000 \text { total } \\\hline\end{array}$$
Davies 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). $$\begin{array} { | l | l | l | l | l | } \hline & \begin{array} { l } \text { Flexible } \\\text { Budget }\end{array} & \text { Actual Results } & \begin{array} { l } \text { Flexible Budget } \\\text { Variance }\end{array} & \begin{array} { l } \text { Favorable or } \\\text { unfavorable }\end{array} \\\hline \text { Number of units } & & & & \\\hline \text { Sales Revenue } & & & & \\\hline \begin{array} { l } \text { Variable } \\\text { manufacturing } \\\text { costs }\end{array} & & & & \\\hline \begin{array} { l } \text { Contribution } \\\text { margin }\end{array} & & & & \\\hline \begin{array} { l } \text { Fixed } \\\text { manufacturing cost }\end{array} & & & & \\\hline \begin{array} { l } \text { Fixed selling and } \\\text { administrative cost }\end{array} & & & & \\\hline \text { Net income } & & & & \\\hline\end{array}$$
b) Assess the company's performance compared to the flexible budget.

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Definitions:

Dissociative Identity Disorder

A psychiatric disorder characterized by the presence of two or more distinct personality states that control an individual's behavior in different situations.

Emotional Trauma

A deeply distressing or disturbing experience that significantly impacts an individual's emotional and psychological well-being.

Genetic Predisposition

A genetic effect which influences the likelihood of developing a particular condition based on the genetic makeup of an individual.

Anxiety Disorders

Mental health disorders characterized by significant and persistent fear, worry, or anxiety that interferes with daily activities.