Xlon Co budgets a seling price of $ 86 per unit , varlable costs of $ 34 per unit , and total fixed costs of $ 286,000 . During June , the company produced and sold 12,400 units and incurred actual variable costs of $ 367,000 and actual fixed costs of $ 301,000 . Actual sales for June were $ 1,100,000 . Prepare a flexible budget report showing variances between budgeted and actual results . List variable and fixed expenses separately . ( Indicate the effect of each variance by selecting for favorable , unfavorable , and no variance )

Answer and Explanation:

The preparation of the flexible budget report is presented below;

Particulars       Flexible budget   Actual sales    Variance     fav or unfav

Sales               $1,066,400          $1,100,000       $33,600      favorable

Less:

Variable expense  $421,600      $367,000        $54,600       favorable

Contribution margin $644,800    $733,000     $88,200        favorable

Less:

Fixed expense       $286,000      $301,000      $15,000        unfavorable

Net operating income $358,800  $432,000   $73,200        favorable

answer(d) encourage cooperation by improving the chances of mutually agreeable transactions;