QS 21-4 Flexible budget performance report LO P1 Assume that actual sales for the year are $480,000 (26,000 units), actual variable costs for the year are $112,000, and actual fixed costs for the year are $145,000. Prepare a flexible budget performance report for the year.

The preparation of the flexible budget performance report for the year is presented below:

Explanation:

The preparation of the flexible budget performance report for the year

                                Flexible budget performance report

Flexible budget         Actual results        Variance         fav or unfav

sales$520,000           $480,000         $40,000        Unfav

variable cost($104,000)($112,000)         $8,000         Unfav

Contribution margin  $416,000$368,000$48,000         Unfav

Fixed cost    ($150,000)       ($145,000)$5,000          Fav

Net operating

income            $266,000        $223,0 00  $43,000Unfav

Working Notes:

The selling price per unit is

= $400,000 ÷20,000 units

= $20 per unit

So total sales = 26,000 units  × $20 = 520,000

And,

Variable cost per unit is

= $80,000 ÷ 20,000 units

= 4 per unit

So, variable cost is = $4 × 26,000 units = $104,000

If actual sales is less than the flexible budgets sales than it leads to unfavorable variance else it is favorable variance

answer; (a) conduct a worksite inspection;