Question
As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended.
| As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the companys sole product: |
| Actual | Master (Static) Budget | |||||
| Units sold | 35,000 | 40,000 | ||||
| Sales | $ | 387,000 | $ | 457,000 | ||
| Variable costs | $ | 217,000 | $ | 277,000 | ||
| Fixed costs | $ | 154,500 | $ | 142,000 | ||
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| Required: | |
| 1. | What was the actual operating income for the period? |
| 2. | What was the companys master budget operating income for the period? |
| 3. | What was the total master (static) budget variance, in terms of operating income, for the period? Is this variance favorable or unfavorable? |
| 4. | From the information given earlier, decompose the total master (static) budget variance by determining the amounts for both the total flexible-budget variance and sales volume variance. Are these variances favorable or unfavorable? (Leave no cells blank - be certain to enter "0" wherever required. If a variance has no amount, select "None" in the corresponding dropdown cell.) |
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