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Author Question: Chillcott Manufacturing produces ceiling fans. A master budget was prepared by the controller based ... (Read 60 times)

dusk108

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on: Feb 5, 2023
Chillcott Manufacturing produces ceiling fans. A master budget was prepared by the controller based on sales of 19,500 fans for the month of May. The budgeted income statement for the period follows:

Budgeted Income Statement
Revenue​$3,120,000
Variable expenses​​
Direct materials$877,500​
Direct labor390,000​
Variable overhead585,000​
Total variable expenses​1,852,500
Contribution margin​1,267,500
Fixed overhead325,000​
Fixed selling and administrative expenses650,000​
Total fixed expenses​    975,000
Operating income​$   292,500

During May, Chillcott produced and sold 23,400 fans and had the following actual results:

Actual Income Statement
Revenue​$3,731,000
Variable expenses​​
Direct materials$1,037,400​
Direct labor487,500​
Variable overhead   715,000​
Total variable expenses​2,239,900
Contribution margin​1,491,100
Fixed overhead351,000​
Fixed selling and administrative expenses 650,000​
Total fixed expenses​1,001,000
Operating income​$   490,100

Required:

a.Prepare a flexible budget for May.
b.Calculate Chillcott's static budget variance for May.
c.Will the static budget variance that you calculated in part (b) be useful to
management?
Why or why not?
d.Based on the available information, prepare a performance report for management.
e.Comment on the results of your report.
Managerial Accounting ¦ Davis ¦ 4th Edition
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Marked as best answer by dusk108 on Feb 5, 2023

marufp

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Reply #1 on: Feb 5, 2023
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dusk108

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Reply 2 on: Feb 5, 2023
Thanks for the timely response, appreciate it

Kedrick2014

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Reply 3 on: Yesterday
Wow, this really help

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