Question

1. Dawn Company manufactures and sells joint rod for cars. The company uses units (number of joint rod production) as the measure of activity. During October 2019, the company planned to produce 6,200 units, but its actual production was 6,160 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for the month of October:

Data used in planning budgeting (for 6200 units):

	Fixed costs per month	Revenue  per unit
Revenue		$38.80
		Variable costs per unit
Direct Labor		$6.20
Direct Material		$8.40
Manufacturing Overhead	$ 74,400	$2.20
Selling & Admin Costs	$ 45,600	$0.60
Total Expenses	$ 120,000	$17.40

Actual operation results for (for 6,160 unit)

Total Revenue	$ 239,008
Direct Labor	$ 38,192
Direct Material	$ 51,744
Manufacturing Overhead	$ 87,952
Selling & Admin Costs	$ 49,296
Total Expenses	$ 227,184

Based on the “budgeted” and “actual”  results, what would be the:

a. “Net Operating Profit” for planning budget

b. Actual “Net Operating Profit”   

Answer 1

Actual Results Planning Budget 6,200 Number of units (9) 6,160 $ 239,008 $ 240,560 Revenue ($38.80*a) Expenses: Direct labor ($6.20*9) Direct materials ($8.40*9) Manufacturing overhead ($74,400 + $2.20*9) Selling and administrative costs ($45,600 + $0.60*q) Total expenses Net operating profit $ $ $ $ $ 38,192 $ 51,744 $ 87,952 $ 49,296 $ 227,184 $ 11,824 $ 38,440 52,080 88,040 49,320 227,880 12,680 Net operating profit for planning budget is $12,680 Actual net operating profit is $11,824