ABC Company had the following budget for November 2018:

Budgeted Contribution Income Statement November 2018
Sales (1,800 units)			$450,000
Less variable costs
Variable cost of goods sold
Direct materials (10 ounces / unit)	$90,000
Direct labor (1.2 labor hours / unit)	36,000
Manufacturing overhead (0.25 machine hours / unit)	27,000
		$153,000
Selling (based directly on units)		108,000
			261,000
Contribution margin			189,000
Less fixed cost
Manufacturing overhead		80,000
Selling		60,000
Administrative		21,000
			161,000
Net income			$28,000

Earlier in the year, demand for their product increased sharply. They raised the price some in an attempt to optimize profitability. Acquiring additional materials was not a big problem. In fact, their supplier was happy to see them raise their quantity per order. Conversely, labor was a more difficult problem. The community around the plant had low unemployment and a fairly stable population. Thus, the only option was to offer the current employees overtime at 1.5 times their normal hourly wage. And, the only option with the machinery was to run it more hours and baby it so that it would not breakdown.

Overall the results at the end of the month looked pretty good:

Actual Contribution Income Statement November 2018
Sales (2,500 units)			$687,500
Less variable costs
Variable cost of goods sold
Direct materials (25,500 ounces)	$125,000
Direct labor (3,200 labor hours)	57,500
Manufacturing overhead (550 machine hours)	48,750
		$231,250
Selling (based directly on units)		188,000
			419,250
Contribution margin			268,250
Less fixed cost
Manufacturing overhead		78,000
Selling		75,000
Administrative		23,000
			176,000
Net income			$92,250

Your job is to prepare for a meeting between the owner and the president of ABC Company. The owner has asked you to be ready to describe all differences between budgeted and actual numbers.

Variance	Amount	Concise Explanation for the Owner
Total Volume Variance in terms of Net Income
Sales Price Variance
Direct Materials Efficiency Variance
Direct Materials Price Variance
Direct Labor Efficiency Variance
Direct Labor Rate Variance
Variable Manufacturing Overhead Efficiency Variance
Variable Manufacturing Overhead Spending Variance
Variable Selling Spending Variance
Fixed Manufacturing Overhead Spending Variance
Fixed Selling Spending Variance
Fixed Administrative Spending Variance

In your opinion, how did ABC Company do in responding to the unexpected changes?

What are your three most important questions or variances that you want to investigate?