Congratulations you have just been hired by Winter Company! Your job is to prepa

Question

Congratulations you have just been hired by Winter Company! Your job is to prepare their monthly performance report. The report is presented to management each month. Report includes the following: 1. A budget versus actual analysis for the contribution margin income statement. The format of the report is a four column report, with Actual data, Budgeted data, the dollar amount of the variance and the variance %. The Variance percentage is calculated by dividing the budget variance by the budgeted dollar amount. 2. An analysis of Capital Turnover, Return on Sales, Residual Income and Return on Investment. These four performance measurements are calculated for the budgeted and actual data. They also include a budget variance for these items (but they do not calculate a variance % for these items.) Prepare the performance report for Winter Company. Make your own conclusions about their budgeted versus actual performance.

(place your formulas in the grey boxes)

Winter Company Actual Budget <---REMEMBER TO USE AN INPUT SECTION Sales in units 10000 11000      IN YOUR MODEL AND REFERENCE IT IN YOUR Unit Selling price $21.00 $20.00     FORMULAS Variable Costs:     Variable manufacturing costs per unit $7.00 $6.00     Variable marketing and admin costs per unit $3.00 $4.00 Fixed Costs:     Fixed manufacturing costs $20,000.00 $23,000.00     Fixed marketing and admin costs $25,000.00 $28,000.00 Investment $200,000.00 $220,000.00 Rate of Return 12% 12% Performance Report: Total Sales Total Variable Costs Total Contribution Margin Total Fixed Costs Operating Income Capital Turnover Return on Sales Residual Income Return on Investment

(place your formulas in the grey boxes)

Explanation / Answer

Winter Company Actual Budget Sales in units                       10,000            11,000         1,000 9.09% Unit Selling price                               21                    20               (1) -5.00% Variable Costs:             Variable manufacturing costs per unit                                 7                       6               (1) -16.67%     Variable marketing and admin costs per unit                                 3                       4                 1 25.00% Fixed Costs:             Fixed manufacturing costs                       20,000            23,000         3,000 13.04%     Fixed marketing and admin costs                       25,000            28,000         3,000 10.71%         Investment                    200,000          220,000 Rate of Return 12% 12%

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