Classics, Ltd., details cars. Classics wants to compare this quarter's results with those for last quarter, which is believed to be typical for operations. Assume that the following information is provided. Last Quarter This Quarter Number of detailings 510 663 $87, 210 28, 620 $70, 200 34,020 Revenues Variable costs Contribution margin $58, 590 $36, 180 Required: a. Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (Hint Use last quarter as the master budget and this quarter as "actual.") b. What impact did the changes in number of detailings and average revenues (i.e., sales price) have on Classics, Ltd.'s contribution margin?
Classics, Ltd., details cars. Classics wants to compare this quarter's results with those for last quarter, which is believed to be typical for operations. Assume that the following information is provided. Last Quarter This Quarter Number of detailings 510 663 $87, 210 28, 620 $70, 200 34,020 Revenues Variable costs Contribution margin $58, 590 $36, 180 Required: a. Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (Hint Use last quarter as the master budget and this quarter as "actual.") b. What impact did the changes in number of detailings and average revenues (i.e., sales price) have on Classics, Ltd.'s contribution margin?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
![**Problem 17-55 (Algo) Derive Amounts for Profit Variance Analysis (LO 17-6)**
Classics, Ltd., details cars. Classics wants to compare this quarter’s results with those for last quarter, which is believed to be typical for operations. Assume that the following information is provided.
| | Last Quarter | This Quarter |
|-------------------------|--------------|--------------|
| Number of detailings | 510 | 663 |
| Revenues | $87,210 | $70,290 |
| Variable costs | $28,620 | $34,020 |
| Contribution margin | $58,590 | $36,180 |
**Required:**
a. Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (*Hint: Use last quarter as the master budget and this quarter as “actual.”*)
b. What impact did the changes in number of detailings and average revenues (i.e., sales price) have on Classics, Ltd.’s contribution margin?
**Instructions:**
Complete this question by entering your answers in the tabs below.
- **Required A**: [Tab for entering the Flexible Budget analysis]
- **Required B**: [Tab for discussing the impact on contribution margin]
**Note:**
Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (*Hint: Use last quarter as the master budget and this quarter as “actual.”*) Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole number.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F846731f5-07d9-436a-9c82-4241ea515dde%2Fb52e99ff-8805-4a29-a9f9-a2eaebe3db52%2Faagpcw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Problem 17-55 (Algo) Derive Amounts for Profit Variance Analysis (LO 17-6)**
Classics, Ltd., details cars. Classics wants to compare this quarter’s results with those for last quarter, which is believed to be typical for operations. Assume that the following information is provided.
| | Last Quarter | This Quarter |
|-------------------------|--------------|--------------|
| Number of detailings | 510 | 663 |
| Revenues | $87,210 | $70,290 |
| Variable costs | $28,620 | $34,020 |
| Contribution margin | $58,590 | $36,180 |
**Required:**
a. Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (*Hint: Use last quarter as the master budget and this quarter as “actual.”*)
b. What impact did the changes in number of detailings and average revenues (i.e., sales price) have on Classics, Ltd.’s contribution margin?
**Instructions:**
Complete this question by entering your answers in the tabs below.
- **Required A**: [Tab for entering the Flexible Budget analysis]
- **Required B**: [Tab for discussing the impact on contribution margin]
**Note:**
Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (*Hint: Use last quarter as the master budget and this quarter as “actual.”*) Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole number.
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