Tasteez is preparing their 2018 budget. They want to prepare a flexible budget f
ID: 2532703 • Letter: T
Question
Tasteez is preparing their 2018 budget. They want to prepare a flexible budget for use each month. They estimate sales/production will be between 1,500,000 and 2,000,000 boxes of frozen TV dinners per month.
Question 2: The months of January and February 2018 are complete, and Tasteez wants to compare their budget to their actual results. Actual results are shown in the table above.
a-Create the flexible budget based on actual units produced for each month – Jan & Feb.
b-Compare actual results to budgeted results (Favorable or Unfavorable with amounts) for each month.
c-Provide possible explanations for the favorable and unfavorable variances. Was net operating income better or worse than budget? Provide recommendations for Tasteez TV dinners.
Calculations and backup should be completed and submitted in Excel. Use proper Income Statement formatting.
Monthly Budget Data for Question 1: Selling price per unit: Ingredient Costs Packaging Costs Salary and Wages Costs OT for production over 1,750,000 units Fringe Benefits Electricity Waste and Other Costs Rent Costs Insurance Costs Depreciation Costs $6.00 per box $2.00 per box $0.75 per box $300,000 per month $1.00 per box 50% of wages and OT $0.20 per box $0.15 per box $350,000 per month 000 per month $150,000 per month January Actual 1,625,000 $9,650,100 $3,140,000 $1,220,000 $275,000 $11,500 $143,250 $327,500 $301,200 350,000 $50,000 $150,000 February Actual Data for Question 2: Production Sales Ingredient Costs Packaging Costs Salary and Wages Costs Overtime (OT Fringe Benefits Electricity Waste and Other Costs Rent Costs Insurance Costs Depreciation Costs 1,956,000 boxes $11,735,400 $3,815,000 $1,510,000 305,000 $225,100 $265,050 $382,100 $307,500 $350,000 $55,000 $150,000Explanation / Answer
Answers
per box
Flexible Budget Data
Actual Data
Variance
Units 1625000
Units 1625000
Difference
U/F/Neither F nor U
Revenue
$ 6.00
$ 97,50,000.00
$ 96,50,100.00
$ 99,900.00
U
(-) Variable cost:
Ingrediants cost
$ 2.00
$ 32,50,000.00
$ 31,40,000.00
$ 1,10,000.00
F
Packaging cost
$ 0.75
$ 12,18,750.00
$ 12,20,000.00
$ 1,250.00
U
OT for production
$ -
$ 11,500.00
$ 11,500.00
U
Fringe Benefits
$ 1,50,000.00
$ 1,43,250.00
$ 6,750.00
F
Electrivcity
$ 0.20
$ 3,25,000.00
$ 3,27,500.00
$ 2,500.00
U
Waste & Other cost
$ 0.15
$ 2,43,750.00
$ 3,01,200.00
$ 57,450.00
U
Total Variable cost
$ 3.10
$ 51,87,500.00
$ 51,43,450.00
$ 44,050.00
F
Contriution margin
$ 45,62,500.00
$ 45,06,650.00
$ 55,850.00
U
(-) Fixed Costs:
Salaries and Wages
$ 3,00,000.00
$ 2,75,000.00
$ 25,000.00
F
Rent costs
$ 3,50,000.00
$ 3,50,000.00
$ -
Neither F nor U
Insurance Costs
$ 50,000.00
$ 50,000.00
$ -
Neither F nor U
Depreciation costs
$ 1,50,000.00
$ 1,50,000.00
$ -
Neither F nor U
Total Fixed Costs
$ 8,50,000.00
$ 8,25,000.00
$ 25,000.00
F
Net Income
$ 37,12,500.00
$ 36,81,650.00
$ 30,850.00
U
per box
Flexible Budget Data
Actual Data
Variance
Units 1956000
Units 1956000
Difference
U/F/Neither F nor U
Revenue
$ 6.00
$ 117,36,000.00
$ 117,35,400.00
$ 600.00
U
(-) Variable cost:
Ingrediants cost
$ 2.00
$ 39,12,000.00
$ 38,15,000.00
$ 97,000.00
F
Packaging cost
$ 0.75
$ 14,67,000.00
$ 15,10,000.00
$ 43,000.00
U
OT for production
$ 2,06,000.00
$ 2,25,100.00
$ 19,100.00
U
Fringe Benefits
$ 2,53,000.00
$ 2,65,050.00
$ 12,050.00
U
Electrivcity
$ 0.20
$ 3,91,200.00
$ 3,82,100.00
$ 9,100.00
F
Waste & Other cost
$ 0.15
$ 2,93,400.00
$ 3,07,500.00
$ 14,100.00
U
Total Variable cost
$ 3.10
$ 65,22,600.00
$ 65,04,750.00
$ 17,850.00
F
Contriution margin
$ 52,13,400.00
$ 52,30,650.00
$ 17,250.00
F
(-) Fixed Costs:
Salaries and Wages
$ 3,00,000.00
$ 3,05,000.00
$ 5,000.00
U
Rent costs
$ 3,50,000.00
$ 3,50,000.00
$ -
Neither F nor U
Insurance Costs
$ 50,000.00
$ 55,000.00
$ 5,000.00
U
Depreciation costs
$ 1,50,000.00
$ 1,50,000.00
$ -
Neither F nor U
Total Fixed Costs
$ 8,50,000.00
$ 8,60,000.00
$ 10,000.00
U
Net Income
$ 43,63,400.00
$ 43,70,650.00
$ 7,250.00
F
per box
Flexible Budget Data
Actual Data
Variance
Units 1625000
Units 1625000
Difference
U/F/Neither F nor U
Revenue
$ 6.00
$ 97,50,000.00
$ 96,50,100.00
$ 99,900.00
U
(-) Variable cost:
Ingrediants cost
$ 2.00
$ 32,50,000.00
$ 31,40,000.00
$ 1,10,000.00
F
Packaging cost
$ 0.75
$ 12,18,750.00
$ 12,20,000.00
$ 1,250.00
U
OT for production
$ -
$ 11,500.00
$ 11,500.00
U
Fringe Benefits
$ 1,50,000.00
$ 1,43,250.00
$ 6,750.00
F
Electrivcity
$ 0.20
$ 3,25,000.00
$ 3,27,500.00
$ 2,500.00
U
Waste & Other cost
$ 0.15
$ 2,43,750.00
$ 3,01,200.00
$ 57,450.00
U
Total Variable cost
$ 3.10
$ 51,87,500.00
$ 51,43,450.00
$ 44,050.00
F
Contriution margin
$ 45,62,500.00
$ 45,06,650.00
$ 55,850.00
U
(-) Fixed Costs:
Salaries and Wages
$ 3,00,000.00
$ 2,75,000.00
$ 25,000.00
F
Rent costs
$ 3,50,000.00
$ 3,50,000.00
$ -
Neither F nor U
Insurance Costs
$ 50,000.00
$ 50,000.00
$ -
Neither F nor U
Depreciation costs
$ 1,50,000.00
$ 1,50,000.00
$ -
Neither F nor U
Total Fixed Costs
$ 8,50,000.00
$ 8,25,000.00
$ 25,000.00
F
Net Income
$ 37,12,500.00
$ 36,81,650.00
$ 30,850.00
U
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