Comprehensive problem. Sports, Inc., produces shirts for sports teams. The company has the following master budget income statement for the month of August:
Master Budget (based on 18,000 units)
Sales Revenue (18,000 units at $20) $360,000
Variable Manufacturing Costs $180,000
Variable Marketing and Administrative Costs $ 18,000
Contribution Margin
Fixed Manufacturing Costs $ 80,000
Fixed Marketing and Administrative Costs $ 20,000
The company uses the following estimates to prepare the master budget:
Sales Price $20 per Unit
Sales and Production Volume 18,000 Units
Variable Manufacturing Costs $10 per Unit
Variable Marketing and Administrative Costs $1 per Unit
Fixed Manufacturing Costs $80,000
Fixed Marketing and Administrative Costs $20,000
Assume that the actual results for August were as follows:
Actual
Sales Price $21 per Unit
Sales and Production Volume 20,000 Units
Variable Manufacturing Costs $230,880
Variable Marketing and Administrative Costs $22,000
Fixed Manufacturing Costs $82,000
Fixed Marketing and Administrative Costs $18,000
Compare the master budget, flexible budget, and actual results for the month of August.