What was the actual operating income for the period

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Question - As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the company's sole product:

 

Actual

Master (Static) Budget

Units sold

35,000

40,000

Sales

$404,000

$457,000

Variable costs

234,000

277,000

Fixed costs

154,500

142,000

Required -

1. What was the actual operating income for the period?

2. What was the company's master (static) budget operating income for the period?

3. (a) What was the total master (static) budget variance, in terms of operating income, for the period? (b) Is this variance favorable (F) or unfavorable (U)? (Note: The total master (static) budget variance is also referred to as the total operating income variance for the period.)

4. The total master (static) budget variance for a period can be decomposed into a total flexible-budget variance and a sales volume variance. (a) What was the total flexible-budget variance for the period? (b) Was this variance favorable (F) or unfavorable (U)? (c) What was the sales volume variance for the period? (d) Was this variance favorable (F) or unfavorable (U)?

Reference no: EM132284008

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