Data Table Requirements Performance Report, June 2017 1. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribution margin. What percentage is each static-budget variance relative to its static-budget amount? 2. Break down each static-budget variance into a flexible-budget variance and a sales-volume variance. Actual Static Results 490,000 Budget 479,000 Units (pounds) Revenues 2,616,600 S 2,586,600 3. Calculate the selling-price variance. Variable manufacturing costs 1,646,400 1,580,700 4. Assume the role of management accountant at Chiffon. How would you present the results to John Gosher? Should he be more concerned? If so, why? Contribution margin 970,200 S 1,005,900 John Gosher, the business manager for ice-cream products, is pleased that more pounds of ice cream were sold than budgeted and that revenues were up. Unfortunately, variable manufacturing costs went up, too. The bottom line is that contribution margin declined by $35,700, which is just over 1% of the budgeted revenues of $2,586,600. Overall, Gosher feels that the business is running fine. Print Done
Data Table Requirements Performance Report, June 2017 1. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribution margin. What percentage is each static-budget variance relative to its static-budget amount? 2. Break down each static-budget variance into a flexible-budget variance and a sales-volume variance. Actual Static Results 490,000 Budget 479,000 Units (pounds) Revenues 2,616,600 S 2,586,600 3. Calculate the selling-price variance. Variable manufacturing costs 1,646,400 1,580,700 4. Assume the role of management accountant at Chiffon. How would you present the results to John Gosher? Should he be more concerned? If so, why? Contribution margin 970,200 S 1,005,900 John Gosher, the business manager for ice-cream products, is pleased that more pounds of ice cream were sold than budgeted and that revenues were up. Unfortunately, variable manufacturing costs went up, too. The bottom line is that contribution margin declined by $35,700, which is just over 1% of the budgeted revenues of $2,586,600. Overall, Gosher feels that the business is running fine. Print Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:### Educational Transcript: Chiffon, Inc. Ice-Cream Product Group Analysis
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**Background**
Chiffon, Inc. manufactures basic ingredients used in popular frozen desserts, such as vanilla and chocolate ice creams, puddings, meringues, and fudge. The company applies standard costing and carries no inventory from one month to the next. The following is an analysis of the ice-cream product group’s performance for June 2017.
**Performance Report for June 2017**
- **Units (pounds) Sold:**
- Actual Results: 490,000
- Static Budget: 479,000
- **Revenues:**
- Actual Results: $2,616,600
- Static Budget: $2,586,600
- **Variable Manufacturing Costs:**
- Actual Results: $1,646,400
- Static Budget: $1,580,700
- **Contribution Margin:**
- Actual Results: $970,200
- Static Budget: $1,005,900
John Gosher, the business manager for ice-cream products, noted that while sales exceeded budget expectations, and revenues increased, the variable manufacturing costs also increased. The contribution margin was $35,700 less than the budget, amounting to approximately 1% of the budgeted revenues. Despite the cost increase, Gosher considers the business to be performing well overall.
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**Requirements**
1. **Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribution margin.**
What percentage is each static-budget variance relative to its static-budget amount?
2. **Break down each static-budget variance into a flexible-budget variance and a sales-volume variance.**
3. **Calculate the selling-price variance.**
4. **Assume the role of management accountant at Chiffon.**
How would you present the results to John Gosher? Should he be more concerned? If so, why?
---
**Data Table Explanation**
The table includes a performance report that compares static and actual results across four key metrics: units sold (in pounds), revenues, variable manufacturing costs, and contribution margin. The variances between these figures indicate where performance diverged from initial expectations, providing insights into sales volume, cost control, and pricing effectiveness.
### Analysis Strategy:
Begin by addressing the flexible budget columns. Enter the sales volume variance and static budget variances accordingly. Compute the static budget variance
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