The master budget at Western Company last period called for sales of 225,300 units at $9.3...

The master budget at Western Company last period called for sales of 225,300 units at $9.3 each. The costs were estimated to be $3.78 variable per unit and $225,300 fixed. During the period, actual production and actual sales were 230,300 units. The selling price was $9.40 per unit. Variable costs were $4.80 per unit. Actual fixed costs were $225,300.

Required:

Prepare a sales activity variance analysis. (Indicate the effect of each variance by "F" for favorable, or "U" for unfavorable.)

Expert Solution

	Actual Units	Manufacturing Variances	Sales Price Variance	Flexible Budget	Activity Variance	Master Budget
(230,300 Units)		(Flex - Act)	(230,300 Units)	( Flex - Master)	(225,300 Units)

Sales revenue	2164820 (230,300*9.40)			23030	F	2141790 (230,300*9.30)	46500	F	2095290 (225300*9.30)
Less:
Variable manufacturing costs	1105440 (230,300*4.80)	234906 (1105440-870534)	U			870534 (230,300*3.78)	18900	U	851634 (225300*3.78)
Contribution margin	1059380	234906	U	23030	F	1271256	27600	F	1243656
Less:
Fixed manufacturing costs	225300	0				225300	0		225300
Operating profits	834080	234906	U	23030	F	1045956	27600	F	1018356

ekkarill92 answered 2 years ago

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