Question

The results for July for Brahms & Sons follow:  

	Actual (based on actual sales of 76,000 units)						Master Budget (based on budgeted sales 74,000 units)
Sales revenue		$	560,000					$	629,000
Less
Variable costs
Direct material			76,000						62,900
Direct labor			87,000						111,000
Variable overhead			94,000						111,000
Marketing			17,800						18,500
Administrative			14,700						18,500
Total variable costs		$	289,500					$	321,900
Contribution margin		$	270,500					$	307,100
Less
Fixed costs
Manufacturing			121,500						116,000
Marketing			26,600						18,500
Administrative			90,000						88,000
Total fixed costs		$	238,100					$	222,500
Operating profits		$	32,400					$	84,600

Required:

Prepare a profit variance analysis for Brahms & Sons. ( 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.)

Answer 1

			76,000			74000
			Flexible	Sales activity		Master Budget
			budget	Variance
Sales variance			646000	17,000	F	629,000
less variable costs:
manufacturing costs:
direct material			64600	1,700	U	62,900
direct labor			114000	3,000	U	111,000
variable overhead			114000	3,000	U	111,000
marketing			19000	500	U	18,500
administration			19000	500	U	18,500
total variable cost			330600	8,700	U	321,900
contribution margin			315400	8,300	F	307,100
less fixed costs
manufacturing.			116000	0	N	116000
marketing			18500	0	N	18500
administration			88,000	0	N	88,000
total fixed costs			222500	0	N	222500
operating profits			92900	8,300	F	84,600