AquaCool produces and sells premium bottled water sourced from natural springs.

The budget for 2024 was to sell 50,000 bottles for $5 each. At the end of 2024, Vicky has sold 50,279 bottles and has actual sales revenue of $260,000.

Calculate the flexible budget variance for sales revenue.

Question

AquaCool produces and sells premium bottled water sourced from natural springs.

The budget for 2024 was to sell 50,000 bottles for $5 each. At the end of 2024, Vicky has sold 50,279 bottles and has actual sales revenue of $260,000.

Calculate the flexible budget variance for sales revenue.

BlackTom AI · Accepted Answer

First, identify the key components of a flexible budget variance for sales revenue. The flexible budget adjusts the revenue expectation based on actual sales volume, here measured in bottles sold.

Step 1: Determine the flexible budget revenue. The standard selling price is $5 per bottle. With actual sales volume of 50,279 bottles, the flexible budget revenue equals 50,279 × $5 = $251,395.

Step 2: Note the actual revenue. The actual sales revenue reported is $260,000.

Step 3: Compute the flexible budget variance. Variance = Actual revenue − Flexible budget revenue = $260,000 − $251,395 = $8,605.

Step 4: Interpret the sign. Since actual revenue exceeds the flexible budget, the variance is favorable by $8,605.

Step 5: Consistency check. The calculation aligns with the definition of a favorable variance when actual revenue is higher than expected revenue under the flexible budget, given the actual quantity sold.

If there were alternative answer options, we would compare each one to the computed $8,605 favorable, but in this scenario, the numeric result comes directly from applying the flexible budget formula to the given data.

BACC011 Quiz 5- Requires Respondus LockDown Browser

AquaCool produces and sells premium bottled water sourced from natural springs. The budget for 2024 was to sell 50,000 bottles for $5 each. At the end of 2024, Vicky has sold 50,279 bottles and has actual sales revenue of $260,000. Calculate the flexible budget variance for sales revenue.

View Explanation

Log in for full answers

Similar Questions

AquaCool produces and sells premium bottled water sourced from natural springs. The flexible budget for direct material cost is $24,000. The actual direct material cost is $25,000. Is the flexible budget variance for direct material favourable or unfavourable?

Calculate the Total Flexible Budget Variance.

AquaCool produces and sells premium bottled water sourced from natural springs. The budget for 2024 was to sell 50,000 bottles for $5 each. At the end of 2024, Vicky has sold 50,853 bottles and has actual sales revenue of $260,000. Calculate the flexible budget variance for sales revenue.

AquaCool produces and sells premium bottled water sourced from natural springs. The budget for 2024 was to sell 50,000 bottles for $5 each. At the end of 2024, Vicky has sold 50,966 bottles and has actual sales revenue of $260,000. Calculate the flexible budget variance for sales revenue.

AquaCool produces and sells premium bottled water sourced from natural springs. The flexible budget for direct material cost is $24,000. The actual direct material cost is $25,000. Is the flexible budget variance for direct material favourable or unfavourable?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler