Flexible Budget Variance

Flexible Budget Variance Actual Results Unit of Production DM (Frames) DM (Lenses) Direct Labor Total Var Costs Fixed Cost Total Costs Static Budget Amounts 5000 $33,000 $93,000 $90,000 $216,000 $75,000 $291,000 FlexibleBudget Amounts 4850 $32,010 $90,210 $87,300 $209,520 $72,750 $282,270 Flexible-Static Budget Variance -150 ($990) ($2,790) ($2,700) ($6,480) ($2,250) ($8,730) FlexibleActual Variance 0 ($5,238) ($10,082) ($9,603) ($25,123) $485 ($24,638) 4850 $37,248 $100,492 $96,903 $234,643 $72,265 $306,908 Flexible-Budget Amounts = (Static Amount / static units) * flexible units Ex: ($33,000 / 5,000units) * (4,850units) = $32,010 Flexible-Static Budget Variance = (Flexible Budget Amount – Static Budget Amount) Ex: ($32,010- $33,000) = ($990) Flexible-Actual Variance = (Flexible Budget Amount – Actual Results) Ex: ($32,010 - $37,248) = ($5,238)  The Flexible Budget and Static budget are different because the flexible budget takes into effect the change in units sold vs budgeted units sold.  The Direct Materials difference vs static and flexible differences were caused by a nice change in anticipated prices.