Question
Calculus Company makes professional calculators. The profit plan and actual results for the previous year, 2020, are as follows: Profit Plan Actual Results Volume Pounds
- Calculus Company makes professional calculators. The profit plan and actual results for the previous year, 2020, are as follows:
|
| Profit Plan | Actual Results | ||
| Volume | Pounds | Volume | Pounds | |
| Sales | 3,000 | 42,000 | 6,000 | 60,000 |
| Cost of Goods Sold |
|
|
|
|
| Raw material (KG) | 5,000 | 8,000 | 8,000 | 12,000 |
| Raw material (L) | 10,000 | 7,500 | 12,000 | 6,000 |
| Labor (Hours) | 900 | 4,500 | 1,600 | 12,000 |
| Contribution Margin | 22,000 | 30,000 | ||
| Other costs | ||||
| Energy | 3,000 | 5,000 | ||
| Maintenance | 2,000 | 3,000 | ||
| Depreciation | 4,000 | 5,000 | ||
| Selling expenses |
| 6,000 |
| 6,000 |
| Advertising |
| 6,000 |
| 7,000 |
| Profit before interest and tax | 1,000 | 4,000 | ||
The plant manager, Salem, has instructed the plant management accountant to prepare a detailed report to be sent to corporate headquarters comparing each components actual result with the amounts set forth above in the annual budget.
Required: Explain the difference between the expected and actual profit. Show your workings.
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