Osage, Inc., manufactures and sells lamps. The company produces only when it rec

Question

Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month Actual (based on actual orders foron budgeted orders for Master Budget (based 450,000 units) $4,490,000 480,000 units) $4320,000 Sales revenue Less Variable costs 1,536,000 243,000 674,600 397,500 $2,851,100 1,536,000 312,000 624,000 408,000 $2,880,000 $1,440,000 Variable overhead Variable marketing and administrative Total variable costs Less Fixed costs Manufacturing overhead Marketing Administrative 948,100 278,000 196,000 $1,422,100 S 216,800 920,000 278,000 172,000 $1,370,000 S 70,000 Total fixed costs Operating profits

Explanation / Answer

Flexible budget variance Flexible Actual Variance buget budget Actual orders(units) 450,000 450,000 Sales revenue 4,050,000 4,490,000 440,000 F less: Variable costs Materials 1440000 1,536,000 96,000 U Direct labor 292500 243,000 49,500 F Variable overhead 585000 674,600 89,600 U variable marketing & administrative 382500 397,500 15,000 U total variable costs 2700000 2,851,100 151,100 U contribution margin 1,350,000 1,638,900 288,900 F fixed costs: manufacturing overhead 920,000 948,100 28,100 U marketing 278,000 278,000 0 N administrative 172,000 196,000 24,000 U total fixed costs 1,370,000 1,422,100 52,100 U operating profit (loss) -20,000 216,800 236,800 F

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