Question

The master budget at Western Company last period called for sales of 225,700 units at $9.70 each. The costs were estimated to be $3.82 variable per unit and $225,700 fixed. During the period, actual production and actual sales were 230,700 units. The selling price was $9.80 per unit. Variable costs were $5.20 per unit. Actual fixed costs were $225,700. Required: Prepare a profit variance analysis. (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.) WESTERN COMPANY Profit Variance Analysis Actual Budget Manufacturing Variances Sales Price Variance Flexible Budget Sales Activity Variance Master Budget Sales revenue Less: Variable costs Contribution margin Less: O Fixed costs H o Operating profits $ t 0 $ 0 $ 0

Answer 1

Western Company
Profit variance Analysis
	Actual	Manufacturing Variances		Sales Price Variance		Flexible Budget	Sales Activity Variance		Master Budget
Selling units (q)	2,30,700					2,30,700			2,25,700
Selling price per unit (i)	$                  9.80					$           9.70			$                 9.70
Variable cost per unit (ii)	$                  5.20					$           3.82			$                 3.82
Sales Revenue (q x (i))	$       22,60,860			$                23,070	F	$22,37,790	$           48,500	F	$      21,89,290
Less Variable Expenses (q X (ii))	$       11,99,640	$   3,18,366	U			$   8,81,274	$           19,100	U	$         8,62,174
Contribution margin	$       10,61,220	$   3,18,366	U	$                23,070	F	$13,56,516	$           29,400	F	$      13,27,116
Less Fixed Expenses:	$          2,25,700	$                -	None			$   2,25,700	$                     -	None	$         2,25,700
Operating Profits	$          8,35,520	$   3,18,366	U	$                23,070	F	$11,30,816	$           29,400	F	$      11,01,416

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