Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Survey of Accounting Packet 18 Semester Case - Cowboy Ice Cream, Inc. CIC had budgeted its Wholesale Division sales at $8 per unit. CIC planned
Survey of Accounting Packet 18 Semester Case - Cowboy Ice Cream, Inc. CIC had budgeted its Wholesale Division sales at $8 per unit. CIC planned to sell 4,000 units of ice cream to retail customers during May 2018. But, by lowering the sales price to $7.50 per unit, the company was able to increase the actual number of units sold to 4,500 Required a. Determine the sales volume variance and indicate whether it is favorable (F) or unfavorable (U). Master Budget Flexible Budget Volume Variance 4,000 Units 4,500 Units Sales ($8 per unit) b. Determine the flexible budget variance, and indicate whether it is favorable (F) or unfavorable (U). Flexible Budget Actual Re 4,500 Units 4,500 Units Flexible Budget Variance Sales C. Did lowering the price per unit increase profit? Explain. its customers. For June, he plans to only operate the truck for the standard 40 operating hours that he also used in May. This means that many of the operating costs are in effect fixed. The following basic data pertain to June 2018: Variable costs (per bar): Manufacturing and storage cost per ice cream bar $1.34 Cost of paper goods per bar 0.03 Expected fixed costs (total for the month): Labor cost $2,700 Depreciation on truck 750 Gas for truck 2,000 General and administrative costs 573 Required (round all computations to the nearest whole dollar): a. Prepare the pro forma income statement that wopld appears in the master budget if the firm expects to sell 5,000 bars in June at $4.00 per bar. b. A marketing consultant suggests to W.T. that the retail price may affect the number of bars the firm sells. According to the consultant's analysis, if CIC charges customers $3.75 per hour, the firm can sell 5,750 bars. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if the firm raises its rate to $4.25 per bar, the number of bars sold will decline to 4,500. Prepare a flexible budget using the new assumption b. Standard Master Budget Flexible Budget Flexible Budget Costs $4/bar $3.75/bar $4.25/bar 5,000 bars 5,750 bars 4,500 bars Sales Revenue C. Variable costs: Mfg and storage $1.34/ea. Paper goods $0.03/ea. Contribution margin Fixed costs: Labor $2.700 Depreciation $750 Gas for truck $2,000 General and Admin $573 Net income d. Evaluate the three possible outcomes you determined in Requirements a, b, and c and recommend a pricing strategy. I Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U) Item Budget Actual Variance Favorable (F) or Unfavorable (U) $400 $390 $360,000 $390,000 $192,500 $180,000 $137,500 $140,000 $90,000 $89,000 Sales price Sales revenue Cost of goods sold Material purchases at 5,000 pounds Materials usage Production volume Wages at 4,000 hours Labor usage at $12 per hour Research and development expense Selling and administrative expenses 950 units 900 units $30,000 $29,350 $48,000 $48,500 $11,000 $12,500 $24,500 $20,000
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/6697f5e583758_9166697f5e4d66b3.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/6697f5e67ce4b_9176697f5e5ce0b1.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/6697f5e771ddb_9186697f5e6c3e47.jpg)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started