Calculate Variance Analysis using given data.
Target Company's actual results for the period were:
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Sales Volume (in units):
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400,000
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|
|
|
|
|
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Sales Revenues
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$2,440,000
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|
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Variable Costs:
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|
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Manufacturing
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$1,060,000
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|
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Mktg & Admin
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748,000
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1,808,000
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Contribution Margin
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632,000
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|
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Fixed Costs:
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|
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Manufacturing
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400,000
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|
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Mktg & Admin
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200,000
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600,000
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Operating Profit
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32,000
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The company originally planned to produce and sell 350,000 at $6 each. At that volume variable manufacturing costs were budgeted at $2.50, and variable marketing and administrative costs were budgeted at $2.00 each. In addition, the company expected an operating profit of $25,000.
A. In tabular format, recreate the master budget and prepare the flexible budget.
B. Calculate the sales-volume variance, sales price variance, and the total fixed cost variance.