Question

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

	Actual (based on actual of 450 units)						Master Budget (based on budgeted 500 units)
Sales revenue		$	82,310					$	90,000
Less
Manufacturing costs
Direct labor			11,250						12,000
Materials			9,010						11,000
Variable overhead			6,190						8,000
Marketing			4,114						4,800
Administrative			4,000						4,000
Total variable costs		$	34,564					$	39,800
Contribution margin		$	47,746					$	50,200
Fixed costs
Manufacturing			3,855						4,000
Marketing			8,382						8,000
Administrative			7,964						8,000
Total fixed costs		$	20,201					$	20,000
Operating profits		$	27,545					$	30,200

There are no inventories.

Required:

Prepare a profit 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.)

Answer 1

Solution:

Actual (based on Maniufacturing Marketing and Adm.] Sales price Flaxible actual of 450 units) Variances Variances variances Budget 82310 1310 F 81000 Sales activity Master Budget (based variances on budgeted 500 units) 9000 U 90000 11250 9010 6190 4114 Sales revenue Variable cost Manufacturing Direct labor Material Overhead Marketing Administrative Total variable cost Contribution margin Fixed costs: Manufacturing Marketing Administrative Total fixed cost Operating profit 108001 9900 72001 4320 3600 358201 45180 206 F 400 U 194 U 194 U 1200 F 1100 F 800 F 480 F 400 F 3980 F 5020 U 4000 12000 11000 8000 4800 4000 39800 50200 34564 47746 3101F 382 U 3855 8382 7964 20201 27545 36F 40001 8000 8000 200001 25180 40001 8000 8000 20000 30200 346 U 540U 1310F 5020 U

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