Calculating and interpreting sales volume and flexible budget variances (LO1, LO2, LO3). Space Toys manufactures a popular toy rocket ship. The company's master budget and actual operating results for July are:

Master Budgeted Actual Results Rocket ship sales

15,000 units 12,000 units

Revenues $375,000 $300,000

Variable costs 75,000 54,000

Contribution margin 300,000 246,000

Fixed costs 150,000 141,000

Profit $150,000 $105,000

The owner of Space Toys is alarmed that actual revenue decreased by 20% and, more importantly, that actual profit decreased by 30% compared to the master budget. Be-cause of these numbers, the owner is convinced that both the marketing director, who is responsible for sales, and the production manager, who is responsible for controlling costs, did not do good job last quarter.

Required:

a.What is Space Toys' flexible budget for July?

b.What are Space Toys' sales volume and sales price variances for July?

c.What are Space Toys' variable cost and fixed cost variances for July?

d.In light of your answers above, who do you believe is responsible for Space Toys' poor profit performance in July