The President of Coopie Awards was analyzing the actual and budgeted results of operations for the current year (shown in the table below):

She noticed several favorable variances and, in a meeting, gave accolades to the production manager. She also noticed that the sales variance was unfavorable and spent considerable time questioning the sales vice president. She stated, "if production hadn't managed costs so well to cover for your lack of sales, we would have racked-up quite a large net loss for the year."

 

1. Do you agree with the president? Why or why not? Explain your point?

 

2. Where were costs in line and where were they out of line?

 

3. What could have been done to produce more favorable numbers?

Coopie Awards Performance Flexible Budget per Unit Sales Less variable expenses: Direct Materials Direct Labor Variable Factory OH Variable S & A Expense Total Variable Expense Contribution Margin Less Fixed Expenses: Fixed Factory OH Fixed S & A Expense Total Fixed Expense Income From Operations $25.00 4.50 3.75 2.25 1.50 $12.00 $13.00 Report for Quarter Ending March 31 Actual Results Master Budget Variance (50,000) (45,000 Units) $1,125,000 $100,000 150,000 $250,000 212,500 175,750 110,250 70,500 $569,000 $556,000 $85,000 160,000 $225,000 $301,000 $1,250,000 225,000 187,500 112,000 75,000 $600,000 $650,000 $125,000U 12,500F 11,750F 2,250F 4,500F $31,000F $94,000U $100,000 150,000 $250,000 $400,000 $99,000U $5,000U 10,000U $5,000U