A company has produced the following performance report for April. The budget shown in the report was based on an original assumption that the total market size for April would be 40 million units. Since the performance report was produced, more accurate market size information has become available. The actual market size for April was lower than estimated at 37.5 million units.

Required:(a) Produce a statement that reconciles budget profit to actual profit for April in as much detail as possible.(b) Discuss the advantages and disadvantages of your statement with regard to responsibility accounting.

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Budget Actual Variance Sales and production units 2000 000 (350 000) 1650 000 Budget Actual Variance $000 $00 $00 Revenue Variable costs Fixed costs (1357.0) 639.5 (50.0) (767.5) 7 000 5643.0 3580.5 1100.0 4220 1050 Profit 1730 962.5