The president of Coopie Awards was analyzing the actual and budgeted results of operations for the current year. She noticed several favorable variances and gave accolades to the production manager in a meeting. 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."

Respond to post with a different perspective than you did on either the professionalism of the president or the variance analysis completed.

Coopie Awards sold 43,000 brass plaques for the current year with the following results. In the discussion forum comment on Coopie Awards results.

Actual Results

Budget based on 45000 unis Variance

Sales Revenue $1,548,000 $1,575,000 $27,000 Unfavorable

Direct Materials costs 498000 518400 $20,400 Favorable

Direct Labor Costs 94800 99000 $4,200 Favorable

Overhead Costs 126000 126,000 $0

total dierct costs $718,800 $743,400 $24,600 Favorable

Selling and administrative cost 700000 729550 $29,550 Favorable

operating income $129,200 $102,050 ($27,150) Favorable

FLEXIBLE BUDGET

Actual Results Budget based on 43,000 units Variance

Sales Revenue 1,548,000 1,505,000 43,000 Favorable

Direct Material Costs 498,000 495,360 2,640 Unfavorable

Direct Labor Costs 94,800 94,600 200 Unfavorable

Overhead Costs 126,000 120,400 5,600 Unfavorable

Total Direct Costs 718,800 710,360 8,440 Unfavorable

Selling and Administrative Costs 700,000 729,550 -29,950 Favorable

Operating Income 18,800 -19,190 37,990 Favorable

I still do not entirely agree with the President's comments regarding the management of production costs and the lack of sales. The sales VP is not solely responsible for this unfavorable outcome, there is a production team and sales team that are also in part responsible. I still stand by my original post regarding a more professional approach and an understanding of what went wrong and how it can be fixed instead of just assigning blame to one person. In reference to the last tab of the homework, the costs that were in line were sales revenue, selling and admin cost, and operating income. The out of line costs were direct material costs, direct labor costs, and total direct costs as a whole. Something that could potentially have been done to produce more favorable numbers could have been adjustments in wages or possibly looking into a different manufacturer for material costs to potentially decrease that price or possibly increase the selling price of the product itself.

All great points.I also feel having a lower end of year finished product inventory could have helped.This one area effects all other parts of the budget in some way.With a lower end of year finished product amount,labor,overhead,materials and other manufacturing costs all would have been lower,because on top of the sales production,there would have been less production in general.\

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