RTI Company's master budget calls for production and sale of 18,000 units for $81,000; variable costs of $30,600; and fixed costs of $20,000. During the most recent period, the company incurred $32,000 of variable costs to produce and sell 20,000 units for $85,000. During this same period, the company earned $25,000 of operating income.
Required Answers (please explain the math used)
1. Determine the following for RTI Company:
a. Flexible-budget operating income.
b. Flexible-budget variance, in terms of contribution margin.
c. Flexible-budget variance, in terms of operating income.
d. Sales volume variance, in terms of contribution margin.
e. Sales volume variance, in terms of operating income.