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RAZORBACK COMPANY Statement of Income from Operations For Year Ended December 31, 2011 |
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Sales (12,000 units) |
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$288,000 |
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Cost of goods sold |
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|
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Direct materials |
$95,000 |
|
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Direct labor |
16,000 |
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Machinery repairs (variable cost) |
3,300 |
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Depreciation—machinery |
11,920 |
|
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Utilities (variable cost, $7,160) |
8,520 |
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Plant manager salaries |
6,720 |
141,460 |
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Gross profit |
|
146,540 |
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Selling expenses |
|
|
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Packaging |
10,800 |
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Shipping |
37,200 |
|
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Sales salary (annual) |
19,200 |
67,200 |
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General and administrative expenses |
|
|
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Advertising expense |
4,200 |
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Salaries |
9,360 |
|
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Entertainment expense |
10,000 |
23,560 |
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Income from operations |
|
$ 55,780 |
Required
1. Prepare a flexible budget performance report for 2011.
2. Analyze and interpret both the (a) sales variance and (b) direct materials variance.