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Submitted By Felixjing
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Question 1 a) ROA = (net income/average total assets)*100%
= (net income/$200000)*100% = 10%
Net income = $20000
Net income for the quarter=$20000/4=$5000 Budget Revised Budget Actual
Revenue 184000 108100 120565
Variable expense (50% of revenue) 92000 54050 60277 Fixed expenses 53820 53820 55000
Total expenses 145820 107870 115277
Profit 38180 230 5287

Revenue of revised budget = 23*10*47 = $108100
Total bonus = 1000 + ((5287 – 230)/10) * 1 = $1504.8

b) Flexible budget variance = Actual result – Flexible budget amount = Actual Units * Actual CM/unit – Actual Units * Budgeted CM/unit = 27*470*4.75 – 27*470*5 = $3173U
Static budget variance = Actual results – Static budget amount = Actual Units* Actual CM/unit – Budgeted Units * Budgeted CM/unit = 27*470*4.75 – 23*470*5 = $6227F
Sales volume variance = (Actual sales quantity in units– Static budget sales quantity in units) *Budgeted CM/unit = (27*470 – 23*470) * 5 = $9400F
*Actual CM/unit = actual revenue/vehicle – actual variable expenses/vehicle = 9.50 – 9.50/2 = $4.75 Budgeted CM/unit = budgeted revenue/vehicle – budgeted variable expenses/vehicle = 10 – 10/2 = $5 All variance based on revised budget
In conclusion, the location properly was managed in the last quarter, because the actual is better than the budget. The work efficiency is increased, although the average revenue per vehicle reduced. For the three variance, the flexible budget

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