Instant Computing is a contract manufacturer of laptop computers sold under brand named companies. Presented are Instant’s 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 (1,800*$250)………………………………………………….……$450,000

Less variable costs

     Variable cost of goods sold

Direct materials (1,800*$50)………….         $90,000

        Direct Labor (1,800*$20)…….……….       36,000

        Manufacturing Overhead (1,800*$15)..27,000       $153,000

   Selling and Distribution (1,800*$60)…………………....    108,000          (261,000)

Contribution Margin…………………………………….. 189,000

Less Fixed Costs

            Manufacturing Overhead………………………..80,000

            Selling and Distribution………………………….60,000

            Administrative……………………………………21,000              (161,000)

Net Income………………………………………………….                              $28,000

Instant Computing Actual Contribution Income Statement For Month of October

Sales (2,500*$275)…………………………………………………………………..… $687,500

Less variable costs

    Cost of goods sold

            Direct materials………………………$125,000

            Direct Labor………………………..      57,000

            Manufacturing Overhead…………48,750              $231,250

Selling and Distribution…………………………………..             188,000                    (419,250)

Contribution Margin………………………………………..                                                268,250

Less Fixed Costs

     Manufacturing Overhead…………………………………78,000

      Selling and Distribution…………………………………..75,000

      Administrative…………………………………………….43,000                    (196,000)

Net Income (loss)…………………………………………………….                        $72,250

Required

1. Prepare a performance report for Production that compares actual and allowed costs.
2. Prepare a performance report for Selling and Distribution that compares actual and allowed costs.
3. Determine the sales price and the net sales volume variances.
4. Prepare a report that summarizes the performance of Selling and Distribution.
5. Determine the amount by which Administration was over or under budget.
6. Prepare a report reconciling budgeted and actual net income. Your report should focus on the performance of each responsibility center.