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GardenKare Company manufactures several popular brands of herbicides, pesticides, fertilizers and other garden care products. The company is highly decentralized and each product line is

GardenKare Company manufactures several popular brands of herbicides, pesticides, fertilizers and other garden care products. The company is highly decentralized and each product line is independently evaluated every month using predetermined standards. The Company's leading product, Dedbug is marketed in two different levels of potency - Zap being the most potent followed by Strike. The corporate controller, K. Roach provides you with the following data pertaining to November 2021:

BUDGET

Product

Variable

Production Cost per ton

Variable Marketing

cost per ton

Selling Price

per ton

Sales Quantity

(in tons)

Zap

$2,500

$500

$4,500

54

Strike

2,000

300

3,000

270

ACTUAL

Product

Variable Production

Cost per ton

Variable Marketing

cost per ton

Selling

Price perton

Sales Quantity (in tons)

Zap

$2,600

$550

$3,500

40

Strike

2,100

270

3,200

160

Management is concerned about the shortfall in profit compared to the budget and would like to know why, in order to take corrective action, if needed. Management would also like to know its impact on profit with a view to apportion responsibility to the department heads concerned.

The Company based its sales estimates on a predicted monthly industry volume of 6,480 tons. In November, the sales of garden products were low and the actual industry sales were only 5,900 tons. For November, the Company did not budget any fixed costs, however, actual fixed manufacturing costs incurred were $1,800.

Require

  1. Compute all meaningful variances by product, wherever feasible, and reconcile budgeted income to actual income

B) Comment on what mainly caused the shortfall in actual income.

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