RTI Company’s master budget calls for production and sale of 19,300 units for $98,430; variable costs...

3.8 Ratings (522 Votes)

	Sales per unit	=	$98430/19300 units	=	$ 5.10
	Variable cost per unit	=	$44390/19300 units	=	$ 2.30
	Contribution margin per unit	=			$ 2.80

a.	Flexible - Budget Operating Income	=	$ 33,480

	Number of units	=	18600
	Sales	=	$5.10 X 18600 units	=	$ 94,860
Less:	Variable cost	=	$2.30 X 18600 units	=	$ 42,780
	Contribution margin	=		=	$ 52,080
Less:	Fixed cost	=		=	$ 18,600
	Flexible - Budget Operating Income	=		=	$ 33,480

b.	Flexible - Budget Variance in terms of contribution margin	=	920	Favorable

c.	Flexible - Budget Variance in terms of Operating Income margin	=	7,180	Unfavorable

d.	Sales Volume Variance in terms of contribution margin	=	1,960	Unfavorable

e.	Sales Volume Variance in terms of Operating Income margin	=	1,960	Unfavorable

		Actual results	Flexible - Budget Variance		Flexible Budget	Sales Volume Variance		Planning Budget
	Sales	$ 86,300			$ 94,860			$ 98,430
	Variable cost	$ 33,300			$ 42,780			$ 44,390
	Contribution margin	$ 53,000	920	Favorable	$ 52,080	1,960	Unfavorable	$ 54,040
	Fixed cost	$ 26,700			$ 18,600			$ 18,600
	Operating Income	$ 26,300	7,180	Unfavorable	$ 33,480	1,960	Unfavorable	$ 35,440

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b.	Flexible-budget variance, in terms of contribution margin.

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