Fournier Fixtures produces a variety of manufactured items for the home and building industry. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month: Actual (based on actual orders for 392,000 units) Master Budget (based on budgeted orders for 350,000 units) Sales revenue $ 7,448,000 $ 7,000,000 Less Variable costs Materials 2,600,000 2,310,000 Direct labor 230,000 210,000 Variable overhead 1,180,000 1,050,000 Variable marketing and administrative 860,000 770,000 Total variable costs $ 4,870,000 $ 4,340,000 Contribution margin $ 2,578,000 $ 2,660,000 Less Fixed costs Manufacturing overhead 1,560,000 1,580,000 Marketing 475,000 460,000 Administrative 300,000 325,000 Total fixed costs $ 2,335,000 $ 2,365,000 Operating profits $ 243,000 $ 295,000 Required: A)Prepare a sales activity variance analysis for Fournier Fixtures. B) Prepare a profit variance analysis for Fournier Fixtures
Fournier Fixtures produces a variety of manufactured items for the home and building industry. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month: Actual (based on actual orders for 392,000 units) Master Budget (based on budgeted orders for 350,000 units) Sales revenue $ 7,448,000 $ 7,000,000 Less Variable costs Materials 2,600,000 2,310,000 Direct labor 230,000 210,000 Variable overhead 1,180,000 1,050,000 Variable marketing and administrative 860,000 770,000 Total variable costs $ 4,870,000 $ 4,340,000 Contribution margin $ 2,578,000 $ 2,660,000 Less Fixed costs Manufacturing overhead 1,560,000 1,580,000 Marketing 475,000 460,000 Administrative 300,000 325,000 Total fixed costs $ 2,335,000 $ 2,365,000 Operating profits $ 243,000 $ 295,000 Required: A)Prepare a sales activity variance analysis for Fournier Fixtures. B) Prepare a profit variance analysis for Fournier Fixtures
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 17P: Shinto Corp. uses a standard cost system and manufactures one product. The variable costs per...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Fournier Fixtures produces a variety of manufactured items for the home and building industry. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:
| Actual (based on actual orders for 392,000 units) | ||
|---|---|---|
| Sales revenue | $ 7,448,000 | $ 7,000,000 |
| Less | ||
| Variable costs | ||
| Materials | 2,600,000 | 2,310,000 |
| Direct labor | 230,000 | 210,000 |
| Variable |
1,180,000 | 1,050,000 |
| Variable marketing and administrative | 860,000 | 770,000 |
| Total variable costs | $ 4,870,000 | $ 4,340,000 |
| Contribution margin | $ 2,578,000 | $ 2,660,000 |
| Less | ||
| Fixed costs | ||
| Manufacturing overhead | 1,560,000 | 1,580,000 |
| Marketing | 475,000 | 460,000 |
| Administrative | 300,000 | 325,000 |
| Total fixed costs | $ 2,335,000 | $ 2,365,000 |
| Operating profits | $ 243,000 | $ 295,000 |
Required:
A)Prepare a sales activity variance analysis for Fournier Fixtures.
B)
Prepare a profit variance analysis for Fournier Fixtures
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