Instant Computing is a contract manufacturer of laptop computers sold under brand named companies. Presented are Instants budgeted and actual contribution income statements for October. The company has three responsibility centers: Production, Selling and Distribution, and Administration. Production and Administration are cost centers while Selling and Distribution is a profit center.

INSTANT COMPUTING
Budgeted Contribution Income Statement
For Month of October
Sales (1)			$1,920,000
Less variable costs
Variable cost of goods sold
Direct materials (2)	$288,000
Direct labor (3)	192,000
Manufacturing overhead (4)	96,000	576,000
Selling and Distribution (5)		216,000	792,000
Contribution margin			1,128,000
Less fixed costs
Manufacturing overhead		384,000
Administrative		300,000
Selling and Distribution		180,000	864,000
Net income			$264,000

(1) 4,800 x $400 = $1,920,000 (2) 4,800 x $60 = $288,000 (3) 4,800 x $40 = $192,000 (4) 4,800 x $20 = $96,000 (5) 4,800 x $45 = $216,000

INSTANT COMPUTING
Actual Contribution Income Statement
For Month of October
Sales (6)			$2,079,000
Less variable costs
Cost of goods sold
Direct materials	$334,800
Direct labor	205,200
Manufacturing overhead	105,300	645,300
Selling and Distribution		253,800	899,100
Contribution margin			1,179,900
Less fixed costs
Manufacturing overhead		403,200
Administrative		324,000
Selling and Distribution		179,040	906,240
Net income (loss)			$273,660

(6) 5,400 x $385 = $2,079,000 Required

• Part A
• Part B
• Part C
• Part D
• Part E
• Part F

a. Prepare a performance report for Production that compares actual and allowed costs. Note: Do not use any negative signs with your answers.

Instant Computing
Production Performance Report
For the Month of October
			Flexible
		Flexible	Budget
	Actual	Budget	Variance
Volume	Answer	Answer
Manufacturing costs:
Direct materials	Answer	Answer	Answer	AnswerFavorableUnfavorable
Direct labor	Answer	Answer	Answer	AnswerFavorableUnfavorable
Variable overhead	Answer	Answer	Answer	AnswerFavorableUnfavorable
Fixed overhead	Answer	Answer	Answer	AnswerFavorableUnfavorable
Total	Answer	Answer	Answer	AnswerFavorableUnfavorable

b. Prepare a performance report for Selling and Distribution that compares actual and allowed costs. Note: Do not use any negative signs with your answers.

Instant Computing
Selling and Distribution Performance Report
For the Month of October
			Flexible
		Flexible	Budget
	Actual	Budget	Variance
Volume	Answer	Answer
Selling and Distribution:
Variable	Answer	Answer	Answer	AnswerFavorableUnfavorable
Fixed	Answer	Answer	Answer	AnswerFavorableUnfavorable
Total	Answer	Answer	Answer	AnswerFavorableUnfavorable

. Determine the sales price and the net sales volume variances. Note: Do not use any negative signs with your answers. Sales price variance: $Answer AnswerFavorableUnfavorable Net sales volume variance: $Answer Answer

d.

Prepare a report that summarizes the performance of Selling and Distribution. Note: Do not use any negative signs with your answers.

Instant Computing
Selling and Distribution Performance Report
For the Month of October
Sales price variance	Answer	AnswerFavorableUnfavorable
Net sales volume variance	Answer	AnswerFavorableUnfavorable
Selling and distribution expense variance	Answer	AnswerFavorableUnfavorable
Net sales department variance	Answer	AnswerFavorableUnfavorable

Please answer all parts of the question.

e. Determine the amount by which Administration was over or under budget. Note: Do not use any negative signs with your answers. $Answer AnswerFavorableUnfavorable

f. Prepare a report reconciling budgeted and actual net income. Your report should focus on the performance of each responsibility center. Note: Do not use any negative signs with your answers.

Instant Computing
Reconciliation of Budgeted and Actual Net Income
For the Month of October
Budgeted net income	Answer
Sales Department variances	Answer	AnswerFavorableUnfavorable
Production Department variances	Answer	AnswerFavorableUnfavorable
Administration Department variances	Answer	AnswerFavorableUnfavorable
Actual net income (loss)	Answer