Subject: More Analysis Needed EXHIBITS 5 close all exhibits Resources Hello Ben, 2 Performance Report Master Budget Budget @ Actual Actual Results I would like to thank you for sending me the fiscal year-end information for our main Top Products line. I first want to confirm the data you previously provided. 3 Units 36,000 123 37,500 123 37,500 123 Sales $432,000 $450,000 $487,500 5 Variable costs $362,880 123 $378,000 123 $405,000 123 Per your note, we began the fiscal year expecting to sell 36,000 units at $12.00 per unit. The budgeted contribution margin was 16% and fixed costs were budgeted at $28,000. Actual sales for the year were 37,500 units, which totaled $487,500. Actual variable and fixed costs were $405,000 and $36,500, respectively. Please let me know if any of the data I have written above is incorrect. 6 Contribution margin $69,120 $72,000 $82,500 123 7 Fixed costs $28,000 $28,000 $36,500 8 Operating income $97,120 $100,000 $119,000 B I would like you to now take this a few steps further. From an operating income perspective, I would like to know how we actually performed versus how we expected to perform. Then within that, I would like to know how much of that performance related to higher unit sales versus how much related to other factors. I recommend using a flexible budge which will allow you to look at sales and costs at a per unit level. I think this analysis will help us determine what the factors are that are driving the differences between actual versus expected performance. 1 PART II 2 Favorable! Unfavorable Calculate Amount 3 Total variance 123 If you could take a look at this over the next day or so, then I will set up a meeting for tomorrow afternoon for us to discuss. 4 Volume variance 123 IF 5 Flexible budget variance 123 Thank you! Lisa