Question

Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore,...

Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:

Actual (based on actual orders for 450,000 units) Master Budget (based on budgeted orders for 480,000 units)
Sales revenue $ 4,970,000 $ 4,800,000
Less
Variable costs
Materials 1,536,000 1,536,000
Direct labor 226,000 288,000
Variable overhead 627,900 576,000
Variable marketing and administrative 444,000 456,000
Total variable costs $ 2,833,900 $ 2,856,000
Contribution margin $ 2,136,100 $ 1,944,000
Less
Fixed costs
Manufacturing overhead 678,800 650,000
Marketing 175,000 175,000
Administrative 136,000 115,000
Total fixed costs $ 989,800 $ 940,000
Operating profits $ 1,146,300 $ 1,004,000

Required:

Prepare a sales activity variance analysis for Osage, 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.)

Osage Inc

Sales Activity Variance

Flexible Budget Sales Activity Variance Master Budget

Sales Revenue

Variable Costs:

Materials

Direct Labor

Variable Overhead

Variable Marketing and Administrative

Total Variable Costs=

Contribution Margin=

Fixed Costs:

Manufacturing Overhead

Marketing

Administrative

Total Fixed Costs=

Operating Profits=

Homework Answers

Answer #1
Flexible Budget Sales Activity Variance Master Budget
Sales Revenue 4500000 300000 U 4800000
Variable Costs:
Materials 1440000 96000 F 1536000
Direct Labor 270000 18000 F 288000
Variable Overhead 540000 36000 F 576000
Variable Marketing and Administrative 427500 28500 F 456000
Total Variable Costs 2677500 178500 F 2856000
Contribution Margin 1822500 121500 U 1944000
Fixed Costs:
Manufacturing Overhead 650000 0 None 650000
Marketing 175000 0 None 175000
Administrative 115000 0 None 115000
Total Fixed Costs 940000 0 None 940000
Operating Profits 882500 121500 U 1004000
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