The following information is provided concerning the operations of Tolstoy Corpo
ID: 2524875 • Letter: T
Question
The following information is provided concerning the operations of Tolstoy Corporation for the current period Actual (based on Master Budget (based actual of 360 units) on budgeted 400 units) Sales revenue $55,200 $60,000 Less Manufacturing costs Direct labor Materials Variable overhead 8,520 7,200 4,920 3,180 3,000 9,000 8,400 6,000 3,600 3,000 Marketing Administrative Total variable costs $26,820 $30,000 Contribution margin S28,380 $30,000 Fixed costs Manufacturing Marketing Administrative 2,916 6,240 5,976 3,000 6,000 6,000 Total fixed costs $15,132 $15,000 Operating profits $13,248 $15,000 Required Prepare a profit variance analysis like the one in Exhibit 16.5. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations.)Explanation / Answer
Flexible budget is the budget based on Master projections adjusted for actual sales volume.
Variance analysis is based on the actual Vs Flexible budget and Sales activity variance is Flexible budget Vs Master budget.
Actual volume is 360 Units and actual Sale price per unit is 153.33 Vs Budget of 400 units and budgeted sale price of 150 per unit. Flexible budget against sales will be 360 units at 150 per unit.
Table highlighting the Profit variance analysis of Tolstoy Corporation (All amounts are in $ unless otherwise stated )
F= Favourable U is unfavourable and None is no variance
Details Actual (360 Units) Manufacturing variance Marketing and admin variance Sale price variance Flexible budget (For 360 Units) Sales activity variance Master Budget (For 400 Units) Sales revenue 55200 1200 / F 54000 6000/U 60000 Variable cost : Manufacturing Direct Labour 8520 420/U 8100 900/F 9000 Material 7200 360/F 7560 840/F 8400 Overhead 4920 480/F 5400 600/F 6000 Marketing 60/F 3240 360/F 3600 Administrative 300/U 2700 300/F 3000 Contribution Margin 28380 420/F 240/U 1200/F U 30000 Fixed cost : Manufacturing 2916 84/F 3000 0/NONE 3000 Marketing 6240 240/U 6000 0/NONE 6000 Administrative 5976 24/F 6000 0/NONE 6000 Operating profit 13248 336/F 456/U 1200/F U 15000Related Questions
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