Question

Problem 16-51 Sales Activity Variance (LO 16-3)Odessa, Inc., reports the following information concerning operations for the most recent month:

	Actual (based on actual of 540 units)						Master Budget (based on budgeted 600 units)
Sales revenue		$	94,330					$	102,000
Less
Manufacturing costs
Direct labor			11,226						12,000
Materials			12,430						14,400
Variable overhead			9,050						10,800
Marketing			5,146						5,820
Administrative			4,800						4,800
Total variable costs		$	42,652					$	47,820
Contribution margin		$	51,678					$	54,180
Fixed costs
Manufacturing			4,660						4,800
Marketing			9,988						9,600
Administrative			9,564						9,600
Total fixed costs		$	24,212					$	24,000
Operating profits		$	27,466					$	30,180

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.)

Answer 1

Problem 16-51 Sales Activity Variance (LO 16-3)Odessa, Inc., reports the following information concerning operations for the most recent month:

	Flexible budget (540 Units)					Sales activity variance	Master Budget (based on budgeted 600 units)
Sales revenue		$	91800			10200 U		$	102,000
Less
Manufacturing costs
Direct labor			10800			1200 F			12,000
Materials			12960			1440 F			14,400
Variable overhead			9720			1080 F			10,800
Marketing			5238			582 F			5,820
Administrative			4320			480 F			4,800
Total variable costs		$	43038			4782 F		$	47,820
Contribution margin		$	48762			5418 U		$	54,180
Fixed costs
Manufacturing			4800			0 None			4,800
Marketing			9600			0 None			9,600
Administrative			9600			0 None			9,600
Total fixed costs		$	24000			0 None		$	24,000
Operating profits		$	24762			5418 U		$	30,180