Question

The Beekman Company produces engine parts for car manufacturers. A new accountant intern at Beekman has accidentally deleted the calculations on the​ company's variance analysis calculations for the year ended December​ 31, 2017. The following table is what remains of the data.

Performance Report
Year Ended December 31, 2017
	Actual	Flexible-Budget	Flexible	Sales-Volume	Static
	Results	Variances	Budget	Variances	Budget
Units sold	103,000				97,000
Revenues (sales)	$695,250				$412,250
Variable costs	450,000				218,250
Contribution margin	245,250				194,000
Fixed costs	156,250				105,000
Operating income	$89,000				$89,000

1.	Calculate all the required variances.​ (If your work is​ accurate, you will find that the total​ static-budget variance is​ $0.)
2.	What are the actual and budgeted selling​ prices? What are the actual and budgeted variable costs per​ unit?
3.	Review the variances you have calculated and discuss possible causes and potential problems. What is the important lesson learned​ her

Answer 1

Performance report

	Actual results	flexible budget variance	flexible budget	Sales volume variance	static budget
Units sold	103000	0	103000	6000F	97000
Revenues	695250	257500 F	437750	25500F	412250
Variable costs	450000	218250U	231750	13500U	218250
Contribution margin	245250	39250F	206000	12000F	194000
Fixed costs	156250	51250U	105000	0	105000
Operating income/(loss)	89000	12000U	101000	12000F	89000

2.From given static budget

Budgeted selling price = 412250/97000 = 4.25

Budgeted variable cost per unit = 218250/97000 = 2.25

From given actual budget

Actual selling price = 695250/ 103000 = 6.75

Actual variable cost per unit = 450000/103000 = 4.37

3. Flexible budget variance = 12000 U

Sales volume variance = 12000F

Total budget variance = 0