Problem 16-55 Profit Variance Analysis (LO 16-4)

The results for July for Brahms & Sons follow:

	Actual (based on actual sales of 98,000 units)						Master Budget (based on budgeted sales 96,000 units)
Sales revenue		$	650,000					$	816,000
Less
Variable costs
Direct material			98,000						81,600
Direct labor			98,000						144,000
Variable overhead			105,000						144,000
Marketing			20,800						24,000
Administrative			15,800						24,000
Total variable costs		$	337,600					$	417,600
Contribution margin		$	312,400					$	398,400
Less
Fixed costs
Manufacturing			138,100						138,000
Marketing			43,800						24,000
Administrative			102,100						99,000
Total fixed costs		$	284,000					$	261,000
Operating profits		$	28,400					$	137,400

Required:

Prepare a profit variance analysis for Brahms & Sons. ( 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.)

BRAHMS & SONS
Profit Variance Analysis
	Actual (98,000 units)	Manufacturing Variance		Marketing & Administration Variance		Sales Price Variance		Flexible Budget (units)	Sales Activity Variance		Master Budget (96,000 units)
Sales revenue	$650,000										$816,000
Variable costs:
Manufacturing
Direct material	98,000										81,600
Direct labor	98,000										144,000
Overhead	105,000										144,000
Marketing	20,800										24,000
Administration	15,800										24,000
Contribution margin	$312,400										$398,400
Fixed costs:
Manufacturing	138,100										138,000
Marketing	43,800										24,000
Administration	102,100										99,000
Operating profit	$28,400										$137,400