Question

In: Accounting

As the new accountant for Cohen & Co., you have been asked to provide a succinct...

As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the company’s sole product: Actual Master (Static) Budget Units sold 25,000 30,000 Sales $ 402,000 $ 456,000 Variable costs 232,000 276,000 Fixed costs 161,000 141,000 Required: 1. What was the actual operating income for the period? 2. What was the company’s master (static) budget operating income for the period? 3. (a) What was the total master (static) budget variance, in terms of operating income, for the period? (b) Is this variance favorable (F) or unfavorable (U)? (Note: The total master (static) budget variance is also referred to as the total operating income variance for the period.) (If a variance has no amount, select "None" in the corresponding dropdown cell.) 4. The total master (static) budget variance for a period can be decomposed into a total flexible-budget variance and a sales volume variance. (a) What was the total flexible-budget variance for the period? (b) Was this variance favorable (F) or unfavorable (U)? (c) What was the sales volume variance for the period? (d) Was this variance favorable (F) or unfavorable (U)? (Do not round your intermediate calculations. If a variance has no amount, select "None" in the corresponding dropdown cell.)

Solutions

Expert Solution

Master (Static Flexible
Actual Budget Budget
Units sold 25000 30000 25000
Sales $402,000.00 $456,000.00 $          380,000.00
Variable costs $232,000.00 $276,000.00 $          230,000.00
Fixed costs $161,000.00 $141,000.00 $          145,000.00
operating income $     9,000.00 $   39,000.00 $              5,000.00
1)actual operating income= $ 9000
2)master budget operating income= $ 39000
3)total static budget variance= $ 30000 favorable
4a)total flexible budget variance= 9000+5000 = $ 14000
(actual operating income-flexible operating income)
4b)sales volume variance= 5000-39000
                                                     =-34000 unfavorable
(flexible operating income-budgeted operating income)

Related Solutions

As the new accountant for Cohen & Co., you have been asked to provide a succinct...
As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the company’s sole product: Actual Master (Static) Budget Units sold 35,000 40,000 Sales $ 384,000 $ 470,000 Variable costs 214,000 278,000 Fixed costs 137,000 135,000 Required: 1. What was the actual operating income for the period? 2. What was the company’s master (static) budget operating income for...
As the new accountant for Cohen & Co., you have been asked to provide a succinct...
As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the company’s sole product: Master (Static Actual Budget Units sold 35,000 40,000 Sales $390,000 $375,000 Variable costs $220,000 $220,000 Fixed costs $153,125 $145,000 Required: 1. What was the actual operating income for the period? 2. What was the company’s master budget operating income for the period? 3....
As the new accountant for Cohen & Co., you have been asked to provide a succinct...
As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the company’s sole product: Actual Master (Static) Budget Units sold 35,000 40,000 Sales $ 394,000 $ 460,000 Variable costs 224,000 272,000 Fixed costs 142,500 137,000 QUESTIONS: 1. What was the actual operating income for the period? 2. What was the company’s master (static) budget operating income for...
As the accountant of Fun Slide Co., you have been asked to calculate Net sales Cost...
As the accountant of Fun Slide Co., you have been asked to calculate Net sales Cost of merchandise sold Gross profit Net income from the following: gross sales, $45,000 sales returns, $2000 beginning inventory, $5,000 net purchases, $8,000 ending inventory, $2,000 operating expenses, $9,200
You are the junior accountant at CBW Bank. You have been asked to assist with the...
You are the junior accountant at CBW Bank. You have been asked to assist with the 30 June 2020 tax work: i)                    The Bank provided loans totaling $5,000,000 in mortgage loans, equally to 10 of its staff during the year. These loans were interest only repayments and were made at arm’s length, at an interest rate of 5.37%. ii)                   Due to a staff restructuring at the bank, 3 of the staff who took mortgage loans were made redundant on 30 November 2019....
You are the junior accountant at CBW Bank. You have been asked to assist with the...
You are the junior accountant at CBW Bank. You have been asked to assist with the 30 June 2020 tax work: i) The Bank provided loans totaling $5,000,000 in mortgage loans, equally to 10 of its staff during the year. These loans were interest only repayments and were made at arm’s length, at an interest rate of 5.37%. ii) Due to a staff restructuring at the bank, 3 of the staff who took mortgage loans were made redundant on 30...
You are the junior accountant at CBW Bank. You have been asked to assist with the...
You are the junior accountant at CBW Bank. You have been asked to assist with the 30 June 2020 tax work: i)                    The Bank provided loans totaling $5,000,000 in mortgage loans, equally to 10 of its staff during the year. These loans were interest only repayments and were made at arm’s length, at an interest rate of 5.37%. ii)                   Due to a staff restructuring at the bank, 3 of the staff who took mortgage loans were made redundant on 30 November 2019....
Planning is underway for a new hydroelectric power plant, and you have been asked to provide...
Planning is underway for a new hydroelectric power plant, and you have been asked to provide an engineering opinion on the best site for the power plant to be located. Two main sites have been identified for the plant. Site 1 is located at the base of a dam wall, with the waterline located 70 m above the turbine. The location has good accessibility for the construction crew, meaning that they are able to bring in a state-of-the-art turbine-generator system....
You are a plant accountant for Kelly Corp. You have been asked to draft a brief...
You are a plant accountant for Kelly Corp. You have been asked to draft a brief (1- to 1.5 page) issues memo ("to the files") documenting the accounting for the following issue. Kelly Corp has leased a mine from which it recently extracted 1,000 kilograms of bauxite (a mineral that can be used to make aluminum). Kelly Corp plans to sell the bauxite to aluminum manufacturers. Kelly Corp is analyzing whether its bauxite inventory can be carried at its selling...
You are an IT Consultant at FinTechCo and have been asked to provide advice to the...
You are an IT Consultant at FinTechCo and have been asked to provide advice to the Senior Leadership Team to improve the current recruitment strategies. All candidates should satisfy the following three criteria to be considered for a position at FinTechCo: 1. Professional qualifications (P) 2. Industry Experience (E) 3. Leadership qualities (L) FinTechCo has a total of 45 employees. A recent mandatory employee survey revealed: 11 staff have Professional qualifications, the necessary industry Experience and Leadership qualities (i.e. satisfy...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT