BUDGET ANALYSIS FOR THE FIRST SIX MONTHS ENDED JUNE 30, 2021

Budget Actual Variance

Sales units. 445,000 460,000

Sales $1,824,500 $1,863,000. $38,500

Variable costs $694,200 $690,000 $4,200

Contribution margin $1,130,300 $1,173,000. $42,700

Fixed costs (6 mnths) $1,052,960 $1,051,600 $1,360

Net Income $77,340. $121,400 $44,060

Target Volume: 890,000 units for the year

Target Profit: $250,000

Assumption: actual performance will dictate forecasts for the second half of the year

A Board member observed that a profit of $121,400 for half of the year would mean an annual profit of $121,400*2 or $242,800. Assuming Hanson can attain but not exceed the target volume of 890,000 units, and that revenue and cost forecasts for all of 2021 should be based on the actual experience during the first half of 2021.

Based on the first half of 2021 we can forecast that the annual profit will be $242,800. What factors would dictate if the board should or should not be satisfied with the close to target annual profit of $242,800?