Question

7 Bickel Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of November: Bickel Corporation Comparison of Actual Results to Planning Budget For the Month Ended November 30 Actual Planning Results Budget Variances Customers served 23,000 22,000 Revenue ($3.509) $80, 400 $77,000 $3,400 F Expenses: Wages and salaries ($22,200 + $1.129) 47,960 46,840 1,120 U Supplies ($0.529) 10, 340 11,440 1,100 F Insurance ($4,100) 4,100 4,100 None Miscellaneous expense ($3,100 + $0.329) 9,040 10,14€ 1,100 F Total expense 71,440 72,520 1,080 F Net operating income $ 8,960 $ 4,480 $4,680 F Required: Prepare the company's flexible budget performance report for November. Label each variance as favorable (F) or unfavorable (U). (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Bickel Corporation Flexible Budget Performance Report For the Month Ended November 30 Revenue Actual and Flexible Activity Results Spending Budget Variances Variances 23,000 23,000 Planning Budget 22,000 Customers served Revenue Expenses: Wages and salaries Supplies Insurance Miscellaneous expense Total expense Net operating income

Answer 1

Ans.	BICKEL CORPORATION
	Flexible Budget Performance Report
	For the Month Ended November 30
		Actual Results	Revenue & Spending variance		Flexible Budget	Activity variance		Planning Budget
	`	23,000			23,000			22,000
	Revenue	$80,400	$100	U	$80,500	$3,500	F	$77,000
	Expenses:
	Wages and salaries	$47,960	$0	none	$47,960	$1,120	U	$46,840
	Supplies	$10,340	$1,620	F	$11,960	$520	U	$11,440
	Insurance	$4,100	$0	none	$4,100	$0	none	$4,100
	Miscellaneous expense	$9,040	$1,420	F	$10,460	$320	U	$10,140
	Total expenses	$71,440	$3,040	F	$74,480	$1,960	U	$72,520
	Net operating income	$8,960	$2,940	F	$6,020	$1,540	F	$4,480
	*Flexible budget is prepared on the basis of actual units.
	*Fixed expenses remain same as planning budget.
	*Calculation of Flexible budget:
		Flexible Budget
	Customers served	23,000
	Revenue	$3.50 * 23,000
	Expenses:
	Wages and salaries	$22,200 + (23,000 * $1.12)
	Supplies	$0.52 * 23,000
	Insurance	$4,100
	Miscellaneous expense	$3,100 + (23,000 * $0.32)
	Revenue & Spending variance   =   Actual results - Flexible budget
	Activity variance =   Flexible budget - Planning budget
	*Increase in revenue or net operating income from planning budget to flexible budget and flexible budget to actual results =   Favorable.
	*Decrease in revenue or net operating income from planning budget to flexible budget and flexible budget to actual results =   Unfavorable.
	*Increase in expenses from flexible budget to actual results & Planning budget to flexible budget =   Unfavorable.
	*Decrease in expenses from flexible budget to actual results & Planning budget to flexible budget =   Favorable.

Answer 2