Home Insert Page Layout Formulas Data A Performance Report, June 2017 Actual Static Budget 447,000 2 Results 3 Units (pounds) 4 Revenues 5 Variable manufacturing costs 6 Contribution margin 460,000 $2,626,600 1,651,400 $ 975,200 $2,592,600 1,564,500 $1,028,100 Jeff Geller, 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 $52,900, which is just over 2% of the budgeted rev- enues of $2,592,600. Overall, Geller feels that the business is running fine. 1. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribu- tion 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 Cascade. How would you present the results to Jeff Geller? Should he be more concerned? If so, why? Required

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Flexible-budget and sales volume variances. Cascade, Inc., produces the basic llings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Cascade uses standard costing
and carries over no inventory from one month to the next. The icecream product group’s results for June 2017 were as follows:

Home
Insert
Page Layout
Formulas
Data
A
Performance Report, June 2017
Actual
Static Budget
447,000
2
Results
3 Units (pounds)
4 Revenues
5 Variable manufacturing costs
6 Contribution margin
460,000
$2,626,600
1,651,400
$ 975,200
$2,592,600
1,564,500
$1,028,100
Jeff Geller, 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 $52,900, which is just over 2% of the budgeted rev-
enues of $2,592,600. Overall, Geller feels that the business is running fine.
1. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribu-
tion 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 Cascade. How would you present the results to Jeff
Geller? Should he be more concerned? If so, why?
Required
Transcribed Image Text:Home Insert Page Layout Formulas Data A Performance Report, June 2017 Actual Static Budget 447,000 2 Results 3 Units (pounds) 4 Revenues 5 Variable manufacturing costs 6 Contribution margin 460,000 $2,626,600 1,651,400 $ 975,200 $2,592,600 1,564,500 $1,028,100 Jeff Geller, 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 $52,900, which is just over 2% of the budgeted rev- enues of $2,592,600. Overall, Geller feels that the business is running fine. 1. Calculate the static-budget variance in units, revenues, variable manufacturing costs, and contribu- tion 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 Cascade. How would you present the results to Jeff Geller? Should he be more concerned? If so, why? Required
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