Problem 16-51 (Algo) Solve for Master Budget Given Actual Results (LO 16-2, 4)

A new accounting intern at Gibson Corporation lost the only copy of this period's master budget. The CFO wants to evaluate performance for this period but needs the master budget to do so. Actual results for the period follow.

Sales volume		130,000	units
Sales revenue	$	728,000
Variable costs
Manufacturing		160,160
Marketing and administrative		65,520
Contribution margin	$	502,320
Fixed costs
Manufacturing		204,800
Marketing and administrative		111,450
Operating profit	$	186,070

The company planned to produce and sell 107,900 units for $5.00 each. At that volume, the contribution margin would have been $377,650. Variable marketing and administrative costs are budgeted at 10 percent of sales revenue. Manufacturing fixed costs are estimated at $2.00 per unit at the normal volume of 107,900 units. Management notes, "We budget an operating profit of $1.00 per unit at the normal volume."

Required: b. Prepare a profit variance analysis.

Sales revenue Variable costs: Manufacturing Marketing and administrative Contribution margin Fixed costs: Manufacturing Marketing and administrative Operating profit Actual $ 728,000 160,160 65,520 502,320 204,800 111,450 186,070 $ S GIBSON CORPORATION Profit Variance Analysis Manufacturing Variances Administrative Variances Marketing and Sales Activity Variance Master Budget