A fixed budget is a budget that does not change or flex for increases or decreases in volume. ("Volume" could be sales, units produced, or some other activity.) A fixed budget is also known as a
static budget. To illustrate a fixed budget, let's assume that a company pays a 5% sales commission on all of its sales. If the company prepares a fixed budget and it is projecting sales of $1 million, the budget for sales commissions will be fixed at $50,000. If the actual sales end up being only $900,000 the budget for sales
commissions will remain unchanged at the fixed amount of $50,000. If the actual sales are $1,100,000 the budget for sales commissions will also be $50,000. Had the company prepared a flexible budget, the budget for sales commissions would be expressed as 5% of sales. This means that the budget for sales commissions will be $50,000 only when sales are $1
million. If the company has actual sales of $900,000, the budget for sales commissions will flex and will be $45,000 (5% of $900,000). If the actual sales are $1,100,000 the budget for sales commissions will be $55,000.  Accounting 002 Summer SEMTER 2021 INSTRUCTOR: Kevin Farmer LA Trade Tech Chapter 21 Question 1:The fixed budget indicates sales of $50,000.Actual sales were $55,000. The variance is:$5,000 favorable Question 2:The fixed budget indicates direct laborcosts of $27,500. Actual direct labor costs were $27,000. The variance is:$500 favorable Question 3:A company sells a product for $3. Costof goods sold is budgeted at 60% of sales. The company prepares a flexible budget at twosales volumes. At a sales volume of 50 units, budgeted COGS will be:$90 (3×50= 150)⇒150×60%=90 At a sales volume of 60 units, budgeted COGS willbe:$108 (3×60=180)⇒180×60%=108 Question 4:A company budgets administrative salariesat $5,000 at a sales level of 1,000 units. At a sales level of 1,200 units, budgeted administrativesalaries will be:$5,000 Question 5:Fixed costs equal $25,000; variable costper unit is $2.50 and units produced are 10,000. The total budgeted costs is:$50,000 25000 + (10000×2.50)= 50,000 This preview shows page 1 - 4 out of 14 pages. The fixed budget indicates sales of $50,000. Actual sales were $55,000. Thevariance is: Get answer to your question and much more XxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxManagers use budget reports to answer all of the following questions:XxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxA flexible budget has which of the following characteristics? Get answer to your question and much more Preset costs for delivering a product or service under normal conditions are called Get answer to your question and much more Budget reports are commonly prepared for: XxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxWhen compared to the budgeted amount, if the actual cost or revenue contributesto a higher income, then the variance is consideredA fixed budget performance report indicates a sales variance of $20,000 favorable.The reason for the variance:All of the following individuals work to help set standard costs:XxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxStandard costs have which of the following characteristics? (Check all that apply.)
XxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxWhich of the following is the correct formula?BudgetBlank 1Blank 1 report , Correct Unavailablecontain relevantinformation that compares actual results to planned activities.The main factors that can cause a variance include the following. Select all thatapply.Costs developed which identify what products should cost are calledXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxABC Company has set the following standards for one unit of product: Directmaterials: 0.5 pounds @ $1.00 per pound; Direct labor: 1 hour @ $10.00 per hour.The company produced 35,000 units and had the following actual costs: Directmaterials: 18,000 pounds at a total cost of $17,280; Direct labor: 36,000 hours at atotal cost of $374,400. Compute the total direct materials variance. Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document End of preview. Want to read all 14 pages? Upload your study docs or become a Course Hero member to access this document Tags XYZ Company, Blank 1Blank What is the total sales volume variance e )?The sales volume variance is the difference between the actual and expected number of units sold, multiplied by the budgeted price per unit. The formula is: (Actual units sold - Budgeted units sold) x Budgeted price per unit. = Sales volume variance.
What is the static budget variance of variable costs?To calculate a static budget variance, simply subtract the actual spend from the planned budget for each line item over the given time period. Divide by the original budget to calculate the percentage variance.
What kind of variance results from a difference between the flexible budget and the actual data?The differences between the flexible budget and the static planning budget are activity variances. The differences between the actual results and the flexible budget are the revenue and spending variances.
What are the actual variable costs C )?Variable costs are expenses that vary in proportion to the volume of goods or services that a business produces. In other words, they are costs that vary depending on the volume of activity. The costs increase as the volume of activities increases and decrease as the volume of activities decreases.
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The fixed budget indicates sales of $50,000. actual sales were $55,000. the variance is:
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