AllTalk Technologies manufactures capacitors for cellular base stations and other communications applications. The company's January 2021 flexible budget income statement shows output levels of 6,500, 8,000, and 10,000 units. The static budget was based on expected sales of 8,000 units. ALLTALK TECHNOLOGIES Income Statement Performance Report Month Ended January 31, 2021 By Units (Capacitors) Per Unit 6.500 8.000 Sales revenue $ 156.000 192.000 240.000 Variable expenses $ 65.000 80.000 100.000 Contribution margin 91.000 112.000 140.000 Fixed expenses 53.000 $ 53.000 Operating income $38.000 $59.000 $87.000 The company sold 10,000 units during January, and its actual operating income was as follows: ALLTALK TECHNOLOGIES Income Statement Month Ended January 31, 2021 Sales revenue $ 246.000 Variable expenses 104.500 Contribution margin $ 141.500 Fixed expenses 54.000 Operating income $ 87.500 Requirements 1. Prepare an income statement performance report for January. 2. What was the effect on AllTalk's operating income of selling 2,000 units more than the static budget level of sales? 3. What is AllTalk's static budget variance? Explain why the income statement performance report provides more useful information to AllTalk's managers than the simple static budget variance. What insights can AllTalk's managers draw from this performance report? 24 10 $ 53.000 $ 10.000
AllTalk Technologies manufactures capacitors for cellular base stations and other communications applications. The company's January 2021 flexible budget income statement shows output levels of 6,500, 8,000, and 10,000 units. The static budget was based on expected sales of 8,000 units. ALLTALK TECHNOLOGIES Income Statement Performance Report Month Ended January 31, 2021 By Units (Capacitors) Per Unit 6.500 8.000 Sales revenue $ 156.000 192.000 240.000 Variable expenses $ 65.000 80.000 100.000 Contribution margin 91.000 112.000 140.000 Fixed expenses 53.000 $ 53.000 Operating income $38.000 $59.000 $87.000 The company sold 10,000 units during January, and its actual operating income was as follows: ALLTALK TECHNOLOGIES Income Statement Month Ended January 31, 2021 Sales revenue $ 246.000 Variable expenses 104.500 Contribution margin $ 141.500 Fixed expenses 54.000 Operating income $ 87.500 Requirements 1. Prepare an income statement performance report for January. 2. What was the effect on AllTalk's operating income of selling 2,000 units more than the static budget level of sales? 3. What is AllTalk's static budget variance? Explain why the income statement performance report provides more useful information to AllTalk's managers than the simple static budget variance. What insights can AllTalk's managers draw from this performance report? 24 10 $ 53.000 $ 10.000
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter19: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:AllTalk Technologies manufactures capacitors for cellular base stations and other
communications applications. The company's January 2021 flexible budget income
statement shows output levels of 6,500, 8,000, and 10,000 units. The static budget
was based on expected sales of 8,000 units.
ALLTALK TECHNOLOGIES
Income Statement Performance Report
Month Ended January 31, 2021
By Units (Capacitors)
Per Unit
6.500
8.000
Sales revenue
$
156.000
192.000
240.000
$
65.000
80.000
100.000
Variable expenses
Contribution margin
91.000
112.000
140.000
Fixed expenses
53.000
$
53.000
53.000
Operating income
$38.000
$59.000
$87.000
The company sold 10,000 units during January, and its actual operating income was
as follows:
ALLTALK TECHNOLOGIES
Income Statement
Month Ended January 31, 2021
Sales revenue
$
246.000
Variable expenses
104.500
Contribution margin
$
141.500
Fixed expenses
54.000
Operating income
$
87.500
Requirements
1.
Prepare an income statement performance report for January.
2.
What was the effect on AllTalk's operating income of selling 2,000 units more
than the static budget level of sales?
3.
What is AllTalk's static budget variance? Explain why the income statement
performance report provides more useful information to AllTalk's managers than
the simple static budget variance. What insights can AllTalk's managers draw
from this performance report?
24
10
$
$
10.000
Transcribed Image Text:Output units
Sales revenue
Variable expenses
Contribution margin
Fixed expenses
Operating income
Actual Results
at Actual
Prices
$
ALLTALK TECHNOLOGIES
Income Statement Performance Report
Month Ended January 31, 2021
Flexible Budget
Flexible Budget
for Actual
Variance
Number of
Output Units
$
10.000
246.000
104.500
141.500
54.000
87.500
Sales Volume
Variance
Sales
Volume
Variance
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