A new accounting intern at Gibson Corporation lost the only copy of this period's master budget The CFO wants to evaluate performance for this period but needs the master budget to do so Actual results for the period follow Sales volume 120,000 units Sales revenue $ 806,400 Variable costs Manufacturing 177,408 Marketing and administrative 72,576 Contribution margin $ 556,416 Fixed costs Manufacturing 228,040 Marketing and administrative 137,180 Operating profit $ 191,196 The company planned to produce and sell 99,600 units for $6 00 each At that volume, the contribution margin would have been $418,320 Variable marketing and administrative costs are budgeted at 10 percent of sales revenue Manufacturing fixed costs are estimated at $2 40 per unit at the normal volume of 99,600 units Management notes, We budget an operating profit of $1 00 per unit at the normal volume Required a Construct the master budget for the period Construct the master budget for the period (Do not round intermediate calculations ) GIBSON CORPORATION Master Budget Sales volume 99,600 units Sales revenue $597,600 Variable costs Manufacturing 129,480 Marketing and administrative 59,760 Contribution margin $408,360 Fixed costs Manufacturing 239,040 Marketing and administrative 79,680 Operating profit $89,640 b Prepare a profit variance analysis Prepare a profit variance analysis (Do not round intermediate calculations 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 ) GIBSON CORPORATION Profit Variance Analysis Actual Manufacturing Variances Marketing and Administrative Variances Sales Price Variance Flexible Budget Sales Activity Variance Master Budget Sales revenue $806,400 F F Variable costs Manufacturing 177,408 U U Marketing and administrative 72,576 U U Contribution margin $556,416 U U F F Fixed costs Manufacturing 228,040 11,000 F Marketing and administrative 137,180 U Operating profit $191,196 U U F F Complete this question by entering your answers in the tabs below Required A Required B Prepare a profit variance analysis (Do not round intermediate calculations 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 )

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A new accounting intern at Gibson Corporation lost the only copy of this period's master budget. The CFO wants to evaluate performance for this period

A new accounting intern at Gibson Corporation lost the only copy of this period's master budget. The CFO wants to evaluate performance for this period but needs the master budget to do so. Actual results for the period follow.


Sales volume		120,000	units
Sales revenue	$	806,400
Variable costs
Manufacturing		177,408
Marketing and administrative		72,576
Contribution margin	$	556,416
Fixed costs
Manufacturing		228,040
Marketing and administrative		137,180
Operating profit	$	191,196

The company planned to produce and sell 99,600 units for $6.00 each. At that volume, the contribution margin would have been $418,320. Variable marketing and administrative costs are budgeted at 10 percent of sales revenue. Manufacturing fixed costs are estimated at $2.40 per unit at the normal volume of 99,600 units. Management notes, "We budget an operating profit of $1.00 per unit at the normal volume."

Required:

a. Construct the master budget for the period.

Construct the master budget for the period. (Do not round intermediate calculations.)

GIBSON CORPORATION
Master Budget
Sales volume	99,600	units
Sales revenue	$597,600
Variable costs:
Manufacturing	129,480
Marketing and administrative	59,760
Contribution margin	$408,360
Fixed costs:
Manufacturing	239,040
Marketing and administrative	79,680
Operating profit	$89,640

b. Prepare a profit variance analysis.

Prepare a profit variance analysis. (Do not round intermediate calculations. 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.)

GIBSON CORPORATION
Profit Variance Analysis
	Actual	Manufacturing Variances		Marketing and Administrative Variances		Sales Price Variance		Flexible Budget	Sales Activity Variance		Master Budget
Sales revenue	$806,400						F			F
Variable costs:
Manufacturing	177,408		U							U
Marketing and administrative	72,576				U					U
Contribution margin	$556,416		U		U		F			F
Fixed costs:
Manufacturing	228,040	11,000	F
Marketing and administrative	137,180				U
Operating profit	$191,196		U		U		F			F