Question

Can someone please check my work? I am not sure if I did sections C or F correctly according to the question.

Question 1: Prepare a static budget in Excel for Vroom-Vroom based on 200,000 units produced. (36 points)

A: Show the static budget for December in Contribution Margin Income Statement format.

B: Compare December’s static budget to December’s actual results. Specify which line items are favorable or unfavorable and how much.

C: For Ingredient Costs and Packaging Costs, break out the Price and Volume Variances for December. Provide potential explanations for each one.

D: Show the static budget for January in Contribution Margin Income Statement format.

E: Compare January’s static budget to January’s actual results. Specify which line items are favorable or unfavorable and how much.

F: For Ingredient Costs and Packaging Costs, break out the Price and Volume Variances for January. Provide potential explanations for each one.

IS250,000.00 $ 250,000.00 200.000 DEC Units per Month 200.000 275.000 F Selling Price/REVENUE $ 59.00 $11.800,000.00 16,375,000.00 Raw Mat Cost Package Cost 5 24.00 15.00 (151,250.00 Raw Materia Price Variance is favorable because actual pice is lower than budgeted price Law M al Price Variance Actual Price-budget Price Actual Quantity Packaging Price Variance 4.800.000.00 3.000.000.00 123.45-24.00)=-0.55 To 55). 275.000 |(15.09 - 15.00)-0.09 6.450.000.000 4,150,000.00 U $ $ 24,750.00 P ing Price can underable because cost is meer than budited price Waste and Other Cost Total Variable Cost: Contribution Margin: $ $ $ 6.00 $ 1,200,000.00 49.00 $ 9,800,000.00 10.00 $ 2,000,000.00 $ $ 1,775,000.00 U 13,470,000.00 U 2,905,000.00 $ 1,800,000.00 Raw Material Volume Variance is unfavorable because actual cost is greater than budgeted price Law Manel Volume Variance Actual y Standard Quantity Standard Price Packaging Volume Variance Actuluyandandutyundard Price 15 1125,000.00 Backing Volume Vidence is unfavorable because actul cost ister than budited price Salary and Wages $ 1.75 $ 350,000.00 IS 3.25 IS 25000010019 IS 025 IS SOL000100 $ 2.13 $ 425,000.00 $ January Actual Break Down Requested Lanuary JAN. Sus Budget for 200,000 Uit Units per Month PerUnit Total Selling PriceREVENUE $ 59,00 $ 11,800,000.00 $ 8,845,000.00 U (150.000.000 Raw M a Variance is favorable because ariance is favorable because the cost is less than budgeted price 3,450,000.00 2.250.000.000 Raw Material Cost Packaging Cost Electricity Waste and Other Costs $ $ $ $ $ $ 24.00 $ 4,800,000.00 15.00 $ 3,000,000.00 4.00 $ 800,000.00 6.00 $ 1,200,000.00 49,00 $ 9.800,000.00 10.00 $ 2,000,000.00 $ $ $ $ $ FRAR CON per Unit Raw Material Price Varance Actualice Budget Price Actual Quantity Packaging Price Variance (Actual Price Budget Price Actual Quantity Raw Man Volume Valance Actus Quintygandard Quint a ndard Price 123.00-24.00) - 1.00 -1.00) 150,000 IS (15.00 - 15.00) - 0.00 10.00) 150,000 (150,000-200,000) --50,000 indiferent because both budgeted and actual 1,025,000.00 7,300,000.00 ce is favorable because the cost is less than bude price Contribution Margin: 50 000 15 Salary and Wages $ $ $ 345.000.00 1.75 $ 0.88 $ 3.75 $ 350,000.00 175,000.00 750,000.00 S De t on Costs TotalFeed Costs Net Income 125 S 250.000.00 2013 1.575,000.00 S 2.13 1 5 425.000.001s 1,570,000.00 125.000 ooilu TS

Answer 1

Price Variance is difference between the actual price and the standard price in respect to actual quantity purchased.

So what you answered is Exactly correct.

(ACTUAL PRICE * ACTUAL QUANTITY - STANDARD PRICE * ACTUAL QUANTITY) Which can be simplified to ( AP - SP)* AQ

Sales Volume Variance is the difference between the actual volume and Budgeted volume/standard in respect to Budgeted price.

(ACTUAL QUANTITY * BUDGETED PRICE - BUDGETED QUANTITY * BUDGETED PRICE) which can be simplified to (AQ - BQ)* BP

So both C & F Answers are absolutely Correct and I can assure you that you will be alloted maximum Points.