Carvell Industries has gathered the following information about the actual sales

Question

Carvell Industries has gathered the following information about the actual sales revenues and expenses for its pharmaceuticals segments for the most recent year.

Budgeted data for the same time period for the pharmaceutical segment are as follows (all data is in millions).

Prepare a segment margin performance report for the pharmaceutical segment. Calculate a variance and a variance percentage for each line in the report. Round to the near hundreth for the variance percentages.

Begin by preparing the performance report through contribution margin line. Next, complete the report through the segment margin line, and then finally, complete the report through the operating income line. (Enter the variances as positive numbers. Round the variance percentages to the nearest hundredth percent).

Sales $753,300 Variable Cost of Goods Sold $220,968 Variable Operating Expenses $89,280 Direct Fixed Manufacturing Overhead $107,120 Direct Fixed Operating Expenses $26,250 Common Expenses $21,800

Explanation / Answer

Performance report Actual Budgeted Variance Variance % Sales 753300 697500 55800 F 8.00% (9300*75) Less: variable expenses Variable cost of goods sold 220968 204600 16368 U 8.00% (9300*22) Variable operating expenses 89280 93000 3720 F 4.00% (9300*10) Contribution margin 443052 399900 43152 F 10.79% Less:Direct fixed expenses Direct fixed manufacturing overhead 107120 103000 4120 U 4.00% Direct Fixed Operating Expenses 26250 25000 1250 F 5.00% Segment margin 309682 271900 37782 F 13.90% Less: Common fixed expenses Common Expenses 21800 20000 1800 U 9.00% Operating income 287882 251900 35982 F 14.28%

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