Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Nottingham Forest Products reports the following information concerning operations for the most recent month: Actual (based on actual sales of 4,800 units) Master Budget (based
Nottingham Forest Products reports the following information concerning operations for the most recent month:
Actual (based on actual sales of 4,800 units) | Master Budget (based on budgeted sales of 4,000 units) | |
---|---|---|
Sales revenue | $ 228,700 | $ 188,000 |
Less | ||
Manufacturing costs | ||
Direct labor | 50,302 | 39,000 |
Materials | 31,520 | 27,200 |
Variable overhead | 16,608 | 13,100 |
Marketing | 7,805 | 6,200 |
Administrative | 7,215 | 6,500 |
Total variable costs | $ 113,450 | $ 92,000 |
Contribution margin | $ 115,250 | $ 96,000 |
Fixed costs | ||
Manufacturing | 38,930 | 37,400 |
Marketing | 14,860 | 12,200 |
Administrative | 9,510 | 10,400 |
Total fixed costs | $ 63,300 | $ 60,000 |
Operating profits | $ 51,950 | $ 36,000 |
There are no inventories.
Required:
Prepare a profit variance analysis for Nottingham Forest Products.
Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.
\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{14}{|c|}{ NOTTINGHAM FOREST PRODUCTS } \\ \hline \multicolumn{14}{|c|}{ Profit Variance Analysis } \\ \hline & \multicolumn{2}{|c|}{Actual(4,800Units)} & ManufacturingVariance & MarketingandAdministrativeVariance & \multicolumn{2}{|c|}{ Sales Price Variance } & \multicolumn{2}{|c|}{FlexibleBudget(4,800Units)} & \multicolumn{3}{|c|}{ Sales Activity Variance } & \multicolumn{2}{|c|}{MasterBudget(4,000Units)} \\ \hline Sales revenue & $ & 228,700 & & & & F & $ & 225,600 & $ & 37,600 & F & $ & 188,000 \\ \hline \multicolumn{14}{|l|}{ Variable costs: } \\ \hline \multicolumn{14}{|l|}{ Manufacturing costs: } \\ \hline Direct labor & & 50,302 & U & & & & & 46,800 & & 7,800 & U & & 39,000 \\ \hline Materials & & 31,520 & F & & & & & 32,640 & & 5,440 & U & & 27,200 \\ \hline Overhead & & 16,608 & U & & & & & 15,720 & & 2,620 & U & & 13,100 \\ \hline Marketing & & 7,805 & & & & & & 7,440 & & 1,240 & U & & 6,200 \\ \hline Administrative & & 7,215 & & & & & & 7,800 & & 1,300 & U & & 6,500 \\ \hline Contribution margin & $ & 115,250 & U & & & F & $ & 115,200 & & & & $ & 96,000 \\ \hline \multicolumn{14}{|l|}{ Fixed costs: } \\ \hline Marketing & & 14,860 & & & & & & 12,200 & & & & & 12,200 \\ \hline Administrative & & 9,510 & & & & & & 10,400 & & & & & 10,400 \\ \hline Operating profit & $ & 51,950 & U & & & F & $ & 55,200 & $ & 19,200 & F & $ & 36,000 \\ \hline \end{tabular}Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started