You are recently hired as a cost accountant of a manufacturing company located in the area. The company manufactures gymnastics springboard (three quality level) for high schools in the region. Your supervisor is the production manager, Josh Albert, a highly talented process engineer. Due to the recent departure of Donald Grant, who has been serving as a cost accountant before you, Josh is struggling for organizing various reports and working papers summarizing the performance over the last fiscal quarter. As the first task assigned to you, Josh asks to you translate the meaning of Variance Analysis Workpaper Donald had prepared before he leaves the company. In the workpaper, Donald prepared (1) simple variance analysis reconciling the master budget and the actual performance with flexible budget, (2) extended variance analysis considering the budgeted and actual sales mix (i.e., actual sales deviated from the expected sales mix of "good", "better", "best" products), and (3) standard cost analysis for material costs. Since Donald cannot be reached for several weeks, you will dig into the workpaper and cell references of the excel-based workpaper to understand the structure and meaning of the values in the workpaper.

Please write a brief business memo explaining how the company could report higher profits than expected. In the memo, break down the drivers of profit increase (specify each account and the amount of favorable/unfavorable variances) and educate Josh about the implication of each variance.

Tools Data Window Help S O ) 82% 0 Wed 8:04 PM Q E Excel File Edit o AutoSave OFF Home Insert Draw View Insert HES Page Layout Format u = Formulas Case 3 Data Review View Share Comments = = 3 = = Calibri (Body) 14 A A B IVBOA v 213 Wrap Text General General 1 Gensert A Insert 2X Delete Format Ev 28- O 3 Paste ESTE Merge & Center $ % od -20 Conditional Format Formatting as Table Cell Styles Sort & Filter Find & Select Ideas X Sensitivity x V A1 - fx N Variance Analysis Workpaper O P M Q R S T U V W X Y - AA AB AC AD AE AF $ $ $ Units Sales Materials Labor Variable Overhead Variable Other Contribution Margin Fixed Overhead Fixed Other Profit Actual @ Actual Sales Mix 110,000 $ 12,001,000 2,595,725 2,717,000 783,750 1,310,100 4,594,425 2,150,000 1,050,000 1,394,425 1,001,000 F (285,725) u 33,000 F (13,750) U (100,100) U 634,425 F (150,000) u (50,000) U 434,425 F Flexible Budget @ Budgeted Sales Mix 110,000 $ 11,000,000 2,310,000 2,750,000 770,000 1,210,000 3,960,000 2,000,000 1,000,000 960,000 1,000,000 F (210,000) U (250,000) u (70,000) U (110,000) U 360,000F Budgeted @ Budgeted Sales Mix 100,000 10,000,000 2,100,000 2,500,000 700,000 1,100,000 3,600,000 2,000,000 1,000,000 600,000 S 360,000 F $ $ $ 660,000 F (198,000) U Units Sales Materials Labor Variable Overhead Variable Other Contribution Margin Fixed Overhead Fixed Other Profit Actual @ Actual Sales Mix 110,000 $ 12,001,000 2,595,725 2,717,000 783,750 1,310,100 4,594,425 2,150,000 1,050,000 $ 1,394,425 341,000 F (87,725) U 33,000 F (13,750) U (34,100) U 238,425 F (150,000) U (50,000) U 38,425 F Flexible Budget @ Actual Sales Mix 110,000 $ 11,660,000 2,508,000 2,750,000 770,000 1,276,000 4,356,000 2,000,000 1,000,000 1,356,000 Flexible Budget @ Budgeted Sales Mix 110,000 $ 11,000,000 2,310,000 2,750,000 770,000 1,210,000 3,960,000 2,000,000 1,000,000 $ 960,000 1,000,000 F (210,000) U (250,000) U (70,000) u (110,000) U 360,000 F Budgeted @ Budgeted Sales Mix 100,000 $ 10,000,000 2,100,000 2,500,000 700,000 1,100,000 3,600,000 2,000,000 1,000,000 600,000 (66,000) U 396,000 F 396,000 F 360,000 F Variance Analysis - Workpaper + @ - - + 125% 40090 29100 mk ISO Q & A - W 5) x w Tools Data Window Help S O ) 82% 0 Wed 8:04 PM Q E Excel File Edit o AutoSave OFF Home Insert Draw View Insert HES Page Layout Format u = Formulas Case 3 Data Review View Share Comments = = 3 = = Calibri (Body) 14 A A B IVBOA v 213 Wrap Text General General 1 Gensert A Insert 2X Delete Format Ev 28- O 3 Paste ESTE Merge & Center $ % od -20 Conditional Format Formatting as Table Cell Styles Sort & Filter Find & Select Ideas X Sensitivity x V A1 - fx N Variance Analysis Workpaper O P M Q R S T U V W X Y - AA AB AC AD AE AF $ $ $ Units Sales Materials Labor Variable Overhead Variable Other Contribution Margin Fixed Overhead Fixed Other Profit Actual @ Actual Sales Mix 110,000 $ 12,001,000 2,595,725 2,717,000 783,750 1,310,100 4,594,425 2,150,000 1,050,000 1,394,425 1,001,000 F (285,725) u 33,000 F (13,750) U (100,100) U 634,425 F (150,000) u (50,000) U 434,425 F Flexible Budget @ Budgeted Sales Mix 110,000 $ 11,000,000 2,310,000 2,750,000 770,000 1,210,000 3,960,000 2,000,000 1,000,000 960,000 1,000,000 F (210,000) U (250,000) u (70,000) U (110,000) U 360,000F Budgeted @ Budgeted Sales Mix 100,000 10,000,000 2,100,000 2,500,000 700,000 1,100,000 3,600,000 2,000,000 1,000,000 600,000 S 360,000 F $ $ $ 660,000 F (198,000) U Units Sales Materials Labor Variable Overhead Variable Other Contribution Margin Fixed Overhead Fixed Other Profit Actual @ Actual Sales Mix 110,000 $ 12,001,000 2,595,725 2,717,000 783,750 1,310,100 4,594,425 2,150,000 1,050,000 $ 1,394,425 341,000 F (87,725) U 33,000 F (13,750) U (34,100) U 238,425 F (150,000) U (50,000) U 38,425 F Flexible Budget @ Actual Sales Mix 110,000 $ 11,660,000 2,508,000 2,750,000 770,000 1,276,000 4,356,000 2,000,000 1,000,000 1,356,000 Flexible Budget @ Budgeted Sales Mix 110,000 $ 11,000,000 2,310,000 2,750,000 770,000 1,210,000 3,960,000 2,000,000 1,000,000 $ 960,000 1,000,000 F (210,000) U (250,000) U (70,000) u (110,000) U 360,000 F Budgeted @ Budgeted Sales Mix 100,000 $ 10,000,000 2,100,000 2,500,000 700,000 1,100,000 3,600,000 2,000,000 1,000,000 600,000 (66,000) U 396,000 F 396,000 F 360,000 F Variance Analysis - Workpaper + @ - - + 125% 40090 29100 mk ISO Q & A - W 5) x w