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Posted by: Homeworkhelp
Price Quoted by Student: $4.5
Posted On: 2014-11-30 11:11:55
 
Question

Network Technologies manufactures capacitors for cellular base stations and other communication applications.

 

P23-32B Network Technologies manufactures capacitors for cellular base stations and other communication applications. The company’s July 2012 flexible budget income statement shows output levels of 7,000, 8,500, and 10,500 units. The static budget was based on expected sales of 8,500 units.

NETWORK TECHNOLOGIES

Flexible Budget Income Statement

Month Ended July 31, 2012

 

Per Unit

By Units (Capacitors)

 

 

 

 

7,000

8,500

10,500

Sales revenue

$25

$ 175,000

$ 212,500

$ 262,500

Variable expenses

$13

91,000

110,500

136,500

Contribution margin

 

$ 84,000

$ 102,000

$ 126,000

Fixed expenses

 

56,000

56,000

56,000

Operating income

 

$ 28,000

$ 46,000

$ 70,000

 

The company sold 10,500 units during July, and its actual operating income was as follows:

NETWORK TECHNOLOGIES

Income Statement

Month Ended July 31, 2012

Sales revenue

$ 269,500

Variable expenses

141,500

Contribution margin

$ 128,000

Fixed expenses

57,000

Operating income

$ 71,000

Requirements

1. Prepare an income statement performance report for July 2012.

2. What was the effect on Network’s operating income of selling 2,000 units more than the static budget level of sales?

3. What is Network’s static budget variance? Explain why the income statement performance report provides more useful information to Network’s managers than the simple static budget variance. What insights can Network’s managers draw from this performance report?

Solutions
SOLUTION P 23-32B   Req. 1
Price $4.5
Attachment 1: P23-32B Network.doc
Solution Posted By: Homeworkhelp    Posted on: 30-11-2014