Question

Odessa, Inc., reports the following information concerning operations for the most recent month:

  

	Actual (based on actual of 585 units)						Master Budget (based on budgeted 650 units)
Sales revenue		$	102,870					$	110,500
Less
Manufacturing costs
Direct labor			14,172						14,950
Materials			13,650						15,600
Variable overhead			9,930						11,700
Marketing			5,495						6,175
Administrative			5,200						5,200
Total variable costs		$	48,447					$	53,625
Contribution margin		$	54,423					$	56,875
Fixed costs
Manufacturing			5,070						5,200
Marketing			10,788						10,400
Administrative			10,356						10,400
Total fixed costs		$	26,214					$	26,000
Operating profits		$	28,209					$	30,875

There are no inventories.

  

Required:

Prepare a sales activity variance analysis for Odessa, Inc. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

ODESSA, INC.
Sales Activity Variance
	Flexible Budget (based on actual of 585 units)	Sales Activity Variance		Master Budget (based on budgeted 650 units)
Sales revenue				$110,500
Variable costs:
Manufacturing costs:
Direct labor				14,950
Materials				15,600
Variable overhead				11,700
Marketing				6,175
Administrative				5,200
Total variable costs	$0			$53,625
Contribution margin	$0			$56,875
Fixed costs:
Manufacturing				5,200
Marketing				10,400
Administrative				10,400
Total fixed costs	$0			$26,000
Operating profits	$0			$30,875

Answer 1

Solution: