Delta Division of Gotham Industries, Inc., makes two products, A and B. Both products use the same raw material and are produced in the same factory by the same workforce. In preparing its annual statement of budgeted gross margin, Delta's management used the following assumptions:

The year's actual results were as follows:
1. 1,750 units of A were sold for a total of $427,000.
2. 3,250 units of B were sold for a total of $481,000.
3. Production totaled 1,800 units of A and 3,300 units of B.
4. 180,000 pounds of raw materials were purchased and used; their total cost was $275,400.
5. 9,450 hours of direct labor were worked at a total cost of $187,110.
6. Actual overhead costs were $265,192.
Required:
a. Do as detailed an analysis of variances as the data given permit.
b. Prepare a summary statement for presentation to Delta's top management showing the year's budgeted and actual gross margin and an explanation of the difference between them.

Transcribed Image Text:

Products Sales (units) Unit selling price Standard unit costs: 1,900 $240.00 3,100 5148.00 Raw materials ($1.50/lb.) Direct labor ( $20.00/hr.) Overhead (@ 120% of DL$) 60,00 5 50.00 S 60.00 s 45.00 30.00 $ 36.00 Other production standards: 3,100 Production volume (units) Overhead budget: 5.80 per DLS plus $75,200 fixed Overhead absorption: based on actual DLS 1,900