Sales Activity Variance
Refer to the data in Exercise 16 22. Prepare a sales activity variance analysis for Data 2 Go like the one in Exhibit 16.4.
Exercise 16 22: Prepare Flexible Budget
Data 2 Go manufactures and sells flash drives. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:
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Actual (based on actual of 750,000 units) |
Master Budget (based on budgeted 800,000 units) |
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Sales revenue |
$6,210,000 |
$6,000,000 |
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Less |
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Variable costs |
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Blank flash drives |
1,800,000 |
1,800,000 |
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Direct labor |
345,000 |
420,000 |
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Variable overhead |
843,000 |
780,000 |
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Variable marketing and administrative |
585,000 |
600,000 |
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Total variable costs |
$3,573,000 |
$3,600,000 |
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Contribution margin |
$2,637,000 |
$2,400,000 |
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Less |
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Fixed costs |
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Manufacturing overhead |
1,236,000 |
1,200,000 |
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Marketing |
360,000 |
360,000 |
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Administrative |
255,000 |
225,000 |
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Total fixed costs |
$1,851,000 |
$1,785,000 |
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Operating profits |
$ 786,000 |
$ 615,000 |
Required
Prepare a flexible budget for Data 2 Go.
Exhibit 16.4 Flexible and Master Budget, August—Bayou Division
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A |
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B |
C |
D |
E |
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Flexible Budget |
Sales Activity |
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Master Budget |
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(based on |
Variance |
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(based on |
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actual activity |
(based on |
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planned |
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of 80,000 |
variance in |
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activity of |
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1 |
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units) |
sales volume) |
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100,000 units) |
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2 |
Sales units |
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80,000 |
20,000 |
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100,000 |
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3 |
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4 |
Sales revenue |
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$ 800,000 |
$ 200,000 |
U |
$ 1,000,000 |
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5 |
Less |
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6 |
Variable costs |
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7 |
Variable manufacturing costs |
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304,000 |
76,000 |
F |
380,000 |
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8 |
Variable selling and administrative |
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72,000 |
18,000 |
F |
90,000 |
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9 |
Total variable costs |
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$ 376,000 |
$ |
94,000 |
F |
$ |
470,000 |
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10 |
Contribution margin |
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$ 424,000 |
$ 106,000 |
U |
$ |
530,000 |
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11 |
Fixed costs |
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12 |
Fixed manufacturing overhead |
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200,000 |
–0– |
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200,000 |
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13 |
Fixed selling and administrative costs |
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140,000 |
–0– |
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140,000 |
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14 |
Total fixed costs |
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$ 340,000 |
–0– |
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$ |
340,000 |
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15 |
Profit |
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$ |
84,000 |
$ 106,000 |
U |
$ |
190,000 |
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16 |
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