Question

This question only experts will answer, as its High marks, no handwriting or photo allowed:

Data

	March budget	March actual data
Unit Solds	6,000	5,600
Variable cost	592/ unit	1,836,800
Monthly fixed cost	432,000	400,000
Selling price per unit	880	896

Account variation Report

Units sold	Budget	Variance flexible budget	Flexible budget	Variance sales quantity	Actual
Units sold	6,000	400	5,600	0	5,600
Revenue	5,280,000	352,000	4,928,000	89,600	5,017,600
Variable cost	3,552,000	236,800	3,315,200	1,478,400	1,836,800
Contribution Margin	1,728,000	115,200	1,612,800	1,568,000	3.180,800
Fixed cost	432,000	0	432,000	32,000	400,000
Net Margin(profit)	1,296,000	115,200	1,180,800	1,600,000	2,780,800

The financial accountant has prepared the budget deviation report above, and what is required is:

How do you evaluate the company's performance in light of the data in the report, by analyzing quantity, revenue, variable cost and contribution margin, fixed cost and net margin (profit ), these performances and its relation to departments and for the whole companies.... in Details minimum 300 words.

Answer 1

a) evaluation of company performance.

as the company sold 5600 units in actual as it budgeted for 6000 units.

as selling price is in actual 896 as it budgted price is 880

the revenue generated by the company (selling price * no of units sold) actually 50,17,600 as, the company budgeted the revenue of 52,80,000.the variance estimated of 89,600which is unfavourable balance.. as the company earn revenue less than the budgeted amount.

variable cost actual i per unit is 328per unit but budgeted is 592 per unit.

per unit value for variable cost of actual is less than the budgeted value.

the total cost of variable in actual is 18,36,800 budgeted variable cost is 35,52,000 where 14,78,400 is difference in both the variable costs.which is favourable balance as budgeted cost is more than actual.

contribution margin formula= revenue-variable cost.

the actual contribution margin is 31,80,800 and budgeted is 17,28,000. the variance of the contribution margin is 15,68,000 which is favourable balance.

fixed cost in actual is 4,00,000 and budgeted fixed cost is 4,32,000. it is favourable balance as cost is more 32000

net margin (profit) actual is 27,80,800 and budgeted is 12,96,000 the variance is 16,00,000.which is favourable.

as per conclusion, the company budgeted more cost than the actual.

   the company budgeted less revenue than the actual.

it is as per the priciples of convertasim, anticipated more losses than the income.

as company maintain higher profits than the budgted. so the company is running in good condition.