Actual (based on Master Budget (based actual orders for 450,000 units) on budget

Question

Actual (based on Master Budget (based actual orders for 450,000 units) on budgeted orders 480,000 units) $4,800,000 Sales revenue Less S4.972.000 Variable costs Materials Direct labor Variable overhead Variable marketing and administrative 1,536,000 224,000 675,700 444,500 1,536,000 288,000 624,000 456,000 $2,904,000 S2,880,200 Total variable costs Contribution margin Less $2,091,80051,896,000 Fixed costs Manufacturing overhead Marketing Administrative 968,900 285,000 199,000 $1.452.900 S 638,900 940,000 285,000 175,000 Total fixed costs Operating profits $1,400,000 $496,000 Required Prepare a flexible budget for Osage, Inc. (Do not round intermediate calculations.) OSAGE, INC. Flexible Budget Sales revenue Variable costs: Direct labor Variable marketing and administrative Total variable costs Contribution margin Fixed costs: Manufacturing overhead Marketing Administrative Total fixed costs Operating profit (loss)

Explanation / Answer

Flexible budget variance Flexible Actual Variance buget budget Actual orders(units) 450,000 450,000 Sales revenue 4,500,000 4,972,000 472,000 F less: Variable costs Materials 1440000 1,536,000 96,000 U Direct labor 270000 224,000 46,000 F Variable overhead 585000 675,700 90,700 U variable marketing & administrative 427500 444,500 17,000 U total variable costs 2722500 2,880,200 157,700 U contribution margin 1,777,500 2,091,800 314,300 F fixed costs: manufacturing overhead 940,000 968,900 28,900 U marketing 285,000 285,000 0 N administrative 175,000 199,000 24,000 U total fixed costs 1,400,000 1,452,900 52,900 U operating profit (loss) 377,500 638,900 261,400 F

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