Nikki started by talking with her parents about some of the estimated sales and costs that they thought would incur for the month of September. Here are some of those estimates: Caramel Total Apple Pies Apples Sales price (per unit) Expected sales units (for September) $30.00 $9.50 18,000 8,500 9,500 Caramel Expected Manufacturing costs: Fixed OH (per month) Total $24,875.00 Apple Pies Apples $19,500.00 $5,375.00 Direct labor (per unit) $4.00 $2.40 Direct materials (per unit) $3.25 $1.80 Variable OH (per unit) $2.50 $1.20 Expected Marketing and admin costs: Fixed costs (per month) $7,625.00 $6,000.00 $1,625.00 Variable costs (per unit) $1.45 $0.35 Additionally, Sally informed her that the farm received a special order to sell their apple pies and caramel apples at the local county fair in September. Sally wanted to sell 3,500 pies and 4,500 caramel apples for a discounted price of $20.00 and $7.50, respectively. With, the number of staff and the size of the bakery, Nikki determined that the maximum capacity for the bakery is 4,200 labor hours a month. At the current projected sale amounts she expects that they'll need 3,550 hours to meet their regular sales volume. After review of the salaries of all the staff, Nikki determined that the average hourly wage was $16.00. Ned was also concerned about how much it cost to keep apple pie inventory on hand at the end of the month, caramel apples should be sold within a couple days, so no inventory is left at the end of the month. Since there is a limited shelf life for the apple pies, Ned and Sally try and keep the ending inventories in line with next month's expectations. They estimated that they'd have to start 10,000 apple pies in order to have 1,000 apple pies in-process at the end of the month and 500 finished pies. At the end of August there were 500 pies that were in-process and no finished pies. The variable costs associated with these inventories were as follows: Beginning WIP inventory September costs DM Conversion $2,575 $32,500 $4,225 $40,000 And the conversion cost for the in-process pies is 50% completed and 100% for direct materials. (Use the paragraph above to calculate the units completed and transferred out for work-in-process pies) September was a success for the bakery! They didn't complete the special order but focused on normal sales and with some overtime baked a few more pies. Here were the results for the actual sales and costs at the end of the month. (The actuals as presented below are only to be used for Problem 6.) Total Actual Sales price (per unit) Actual sales units 19,500 Actual variable manufacturing OH $133.225 Actual variable marketing and admin cost $19,200 Actual fixed manufacturing costs $22,150 Actual marketing and admin costs $8,750 Caramel Apple Pies Apples $32.00 $10.00 9,000 10,500 Apple Hilly Farms Budget Analysis a. Prepare Master Budget for September Sales volume (in units) Sales revenue Variable costs: Manufacturing Marketing and admin Contribution margin Fixed costs: Manufacturing Marketing and admin Master Budget Operating profit b. Calculate Variance Analysis between Actual vs. Flexible Budget vs. Master Budget Sales volume Sales revenue Variable costs: Manufacturing Marketing and admin Contribution margin Fixed costs: Manufacturing Marketing and admin Operating profit Sales Actual Cost variances F/U Sales price variances F/U Flexible Budget activity Master variance F/U Budget