Reynolds Construction Materials Company has a sales office that sells concrete culvert pipes to property developers. The sales office is a revenue center and prepares a monthly responsibility report. The following information is provided. Revenue Center Responsibility ReportProductTypeActualSalesRevenueFlexibleBudgetVarianceU/FFlexibleBudgetSalesVolumeVarianceU/FStaticBudget40 inch$31,700 $30,500 $40,00036 inch long40,200 42,200 33,10036 inch short36,000 33,000 31,10032 inch19,100 20,300 28,000 What is the flexible budget variance for the40−inchpipe? A.$1,200 U B.$1,200 F C.$9,500 U D.$9,500 F

The difference that arises between the flexible budget and actual results is termed flexible budget…

Answered: Reynolds Construction Materials Company…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 28E

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Reynolds Construction Materials Company has a sales office that sells concrete culvert pipes to property developers. The sales office is a revenue center and prepares a monthly responsibility report. The following information is provided.

Revenue Center Responsibility Report
Product Type	Actual Sales Revenue	Flexible Budget Variance	U/F	Flexible Budget	Sales Volume Variance	U/F	Static Budget
40 inch	$31,700			$30,500			$40,000
36 inch long	40,200			42,200			33,100
36 inch short	36,000			33,000			31,100
32 inch	19,100			20,300			28,000

What is the flexible budget variance for the

40−inch

pipe?

$1,200 U

$1,200 F

$9,500 U

$9,500 F

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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