Using this information complete the following Sliver Industrial Data $4,500,000

Question

Using this information complete the following

Sliver Industrial

Data

$4,500,000

1. Prepare a budgeted vs actual income statement for each of the business segments.

2. Compute the flexible budget variances for the three segments of Fin Metal's market.

3. Which set of number is a better indicator of performance? Why?

Gold Investment data Sliver investment data

Sliver Industrial

Data

Budget Actual Budget Acutal Budget Actual sales in ounces 1,200,000 1,150,000 2,500,000 2,850,000 3425,000 3,500,000 the average price per ounce $1,580 $1,490 $26.25 $26.50 $26.25 $26.50 variable acquisition costs per ounce $35 $38.75 $10 $11 $9 $9.25 Fixed acquisition costs $250,000,000 $257,500,000 $10,500,000 $12,000,000 $20,500,000 $19,500,000 Variable SG&A costs per ounce $40.50 $42 $12 $12.50 $10 $9.50 Fixed SG&A costs $40,000,000 $45,000,000 $3,750,000 $3,500,000 $4,250,000

$4,500,000

Explanation / Answer

(a) Budgeted vs actual income statement

         81,250

(b) flexible budget variances

(c) Fixed SG & A costs is a better indicator of performance because variance is least in case of Fixed SG & A costs.

Gold Investment Data Silver Investment Data Silver Industrial Data Budgeted Actual Budgeted Actual Budgeted Actual Sales (ounces) 1,200,000 1,150,000     2,500,000     2,850,000     3,425,000     3,500,000 Price per ounce 1,580.00 1,490.00 26.25 26.50            26.25            26.50 Variable acqusuition cost per ounce 35 38.75 10 11 9 9.25 variable SG & A cost per ounce 40.5 42 12 12.5 10 9.5 Contribution per ounce 1504.5 1409.25 4.25 3 7.25 7.75 Total Contribution 1,805,400,000 1,620,637,500 10,625,000     8,550,000 24,831,250 27,125,000 Fixed acquisition costs 250,000,000 257,500,000 10,500,000 12,000,000 20,500,000 19,500,000 Fixed SG & A costs 40,000,000 45,000,000     3,750,000     3,500,000     4,250,000     4,500,000 Net profit 1,515,400,000 1,318,137,500 (3,625,000) (6,950,000)

         81,250

    3,125,000

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