Question

Odessa, Inc., reports the following information concerning operations for the most recent month:

  

	Actual (based on actual of 630 units)						Master Budget (based on budgeted 700 units)
Sales revenue		$	111,340					$	119,000
Less
Manufacturing costs
Direct labor			15,332						16,100
Materials			14,800						16,800
Variable overhead			10,140						11,900
Marketing			6,172						6,860
Administrative			5,600						5,600
Total variable costs		$	52,044					$	57,260
Contribution margin		$	59,296					$	61,740
Fixed costs
Manufacturing			5,470						5,600
Marketing			11,588						11,200
Administrative			11,157						11,200
Total fixed costs		$	28,215					$	28,000
Operating profits		$	31,081					$	33,740

   

There are no inventories.

  

Required:

Prepare a sales activity variance analysis for Odessa, Inc. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your final answers as a whole number.)

Answer 1

ODESSA, Inc.
Sales Activity Variance
	Flexible Budget (630 units)	Sales activity variance		Master Budget (700 units)
	[B]	[B-C]		[C]
Sales revenue	$                107,100	$                       11,900	U	$                 119,000
Variable costs:
Manufacturing
Direct Labor	14,490	1,610	F	16,100
Materials	15,120	1,680	F	16,800
Overhead	10,710	1,190	F	11,900
Marketing	6,174	686	F	6,860
Administrative	5,040	560	F	5,600
Contribution Margin	55,566	6,174	U	61,740
Fixed Costs:
Manufacturing	5,600	-		5,600
Marketing	11,200	-		11,200
Administrative	11,200	-		11,200
Total Fixed Costs	28,000	-		28,000
Operating Profit	27,566	6,174	U	33,740
Notes:
	Master Budget	Cost per unit		Flexible Budget
	(For 700 Units)			(for 630 Units)
	[A]	B = A/700		B × 630
Sales revenue	119,000	170.00		107,100
Variable costs:
Manufacturing
Direct Labor	16,100	23.00		14,490
Materials	16,800	24.00		15,120
Overhead	11,900	17.00		10,710
Marketing	6,860	9.80		6,174
Administrative	5,600	8.00		5,040