Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its operating results for the past year. The company manufactures two environmentally friendly industrial caliber cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results for the year (000s omitted except for the selling price per unit) follow: Actual Sales Variable cost Contribution Fixed cost Units sold T10 $ Operating income $ Unit selling price $ 146,400 60,500 85,900 10,000 75,900 1,200 Budget S40 T10 $ 59,163 15,500 $ 43,663 10,000 33,663 1,517 $ S40 $ 117,000 50,000 $ 67,000 10,000 $ 57,000 $ 100 $ 57,000 25,000 $ 32,000 10,000 $ 22,000 $40 Required: 1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) T10 S40 Total CM Flexible budget variance CM Sales volume variance CM Sales quantity variance CM Sales mix variance
Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its operating results for the past year. The company manufactures two environmentally friendly industrial caliber cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results for the year (000s omitted except for the selling price per unit) follow: Actual Sales Variable cost Contribution Fixed cost Units sold T10 $ Operating income $ Unit selling price $ 146,400 60,500 85,900 10,000 75,900 1,200 Budget S40 T10 $ 59,163 15,500 $ 43,663 10,000 33,663 1,517 $ S40 $ 117,000 50,000 $ 67,000 10,000 $ 57,000 $ 100 $ 57,000 25,000 $ 32,000 10,000 $ 22,000 $40 Required: 1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) T10 S40 Total CM Flexible budget variance CM Sales volume variance CM Sales quantity variance CM Sales mix variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its operating results for the past year. The
company manufactures two environmentally friendly industrial caliber cleaning machines used primarily in automobile
repair shops, gas stations, and auto dealerships. The master budget and operating results for the year (000s omitted
except for the selling price per unit) follow:
Actual
Sales
Variable cost
Contribution
Fixed cost
Units sold
T10
$
Operating income $
Unit selling price
$
CM Flexible budget variance
CM Sales volume variance
146,400
60,500
85,900
CM Sales quantity variance
CM Sales mix variance
10,000
75,900
1,200
Budget
S40
T10
$
$
$
59,163
15,500
43,663
10,000
33,663
1,517
S40
$ 117,000
50,000
$ 67,000
10,000
$ 57,000
$ 100
$ 57,000
25,000
$ 32,000
10,000
$ 22,000
Required:
1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution
margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm. (Do not
round intermediate calculations and round your final answers to the nearest whole dollar amount.)
T10 S40 Total
$ 40
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