Explaining Variances in Performance Reports and Suggesting Possible Causes and Remedies

Widget Company

Manufacturing Overhead Performance Report

For Month Ended June 20XX

Static Budget at 6,000 units

Actual

Variance (Actual—Static Budget)

Flexible Budget at 6,500 units

Variance (Actual—Flexible Budget)

Revenue

$ 60,000

$ 63,240

$ 3,240

F

$ 65,000

$ (1,760)

U

Less:

Variable costs

27,000

31,200

4,200

U

29,250

1,950

U

Contribution Margin

$ 33,000

$ 32,040

$ (960)

U

$ 35,750

$ (3,710)

U

Less:

Fixed costs

24,000

25,000

1,000

U

24,000

1,000

U

Profit

$ 9,000

$ 7,040

$ (1,960)

U

$ 11,750

$ (4,710)

U