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Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for
Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:
Actual (based on actual orders for 450,000 units) | Master Budget (based on budgeted orders for 480,000 units) | ||||||||||
Sales revenue | $ | 4,968,000 | $ | 4,800,000 | |||||||
Less | |||||||||||
Variable costs | |||||||||||
Materials | 1,440,000 | 1,440,000 | |||||||||
Direct labor | 276,000 | 336,000 | |||||||||
Variable overhead | 674,400 | 624,000 | |||||||||
Variable marketing and administrative | 468,000 | 480,000 | |||||||||
Total variable costs | $ | 2,858,400 | $ | 2,880,000 | |||||||
Contribution margin | $ | 2,109,600 | $ | 1,920,000 | |||||||
Less | |||||||||||
Fixed costs | |||||||||||
Manufacturing overhead | 988,800 | 960,000 | |||||||||
Marketing | 288,000 | 288,000 | |||||||||
Administrative | 204,000 | 180,000 | |||||||||
Total fixed costs | $ | 1,480,800 | $ | 1,428,000 | |||||||
Operating profits | $ | 628,800 | $ | 492,000 | |||||||
Required:
Prepare a sales activity variance analysis for Osage, Inc. (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.)
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