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 (1,800*$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

Administrative21,000 (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 Overhead48,750 $231,250

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

Contribution Margin.. 268,250

Less Fixed Costs

Manufacturing Overhead78,000

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.