Ellis Animal Health, Inc. produces a generic medication used to treat cats with feline diabetes. The liquid medication is sold in 100 ml vials. The term that Ellis uses for the product sold is a dose. Ellis employs a team of sales representatives who are paid varying amounts of commission.

Given the narrow margins in the generic veterinary industry, Ellis relies on tight standards and cost controls to manage its operations. Ellis has the following budgeted standards for the month of April 2017:

Budgeted sales for April 700,000 doses

Average selling price per dose $8.30 per dose

Medicine 105 ml/dose @ $0.030 / ml $3.15 per dose

Vials 1 vial per dose @ $0.45 / vial $0.45 per dose

Direct manufacturing labor cost per hour $15.00 / hour

Average labor productivity rate (doses per hour) 100

Sales commission is paid on all sales average commission $0.72 per dose

Fixed administrative and manufacturing overhead $990,000

Actual results

Because of an accident in the factory, actual results were much different than planned

Dose sales and production were 90% of plan.

Actual average selling price increased to $8.40 per dose

Productivity dropped to 90 doses per hour

Raw material

Medicine the company used 72,128,483 milliliters of medicine. They paid $0.029 per milliliter

Vials the company used 702, 450 vials. They paid a total of $365,274 for the vials used

Actual direct manufacturing labor cost was $14.75 per hour

Sales commission The average commission was $0.70 per dose

Fixed overhead costs were $40,000 above budget

1.a Calculate the budget using the contribution margin income statement approach showing the volume, use and rate components (when appropriate)

1.b Calculate the actual results using the contribution margin income statement approach showing the volume, use and rate components (when appropriate)