Jay Banning, CEO and a major stockholder of Banning Incorporated, 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 p unit) follow: Sales Variable cost Contribution Fixed cost Operating income Units sold Unit selling price CM Flexible budget variance CM Sales volume variance CM Sales quantity variance CM Sales mix variance Actual T10 $ 132,000 61,700 $ 70,300 10,000 $ 60,300 1,200 $ S40 $ 58,695 28,000 $ 30,695 10,000 $ 20,695 1,505 T10 15,300 Favorable Favorable Favorable $ (14,101) Unfavorable Budget T10 $ 105,000 50,000 $ 55,000 10,000 $ 45,000 $ 100 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.) 540 $ 45,000 25,000 $ 20,000 10,000 $ 10,000 $ 40 S40 Favorable Favorable Favorable Favorable Total Favorable Favorable Favorable Unfavorable
Jay Banning, CEO and a major stockholder of Banning Incorporated, 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 p unit) follow: Sales Variable cost Contribution Fixed cost Operating income Units sold Unit selling price CM Flexible budget variance CM Sales volume variance CM Sales quantity variance CM Sales mix variance Actual T10 $ 132,000 61,700 $ 70,300 10,000 $ 60,300 1,200 $ S40 $ 58,695 28,000 $ 30,695 10,000 $ 20,695 1,505 T10 15,300 Favorable Favorable Favorable $ (14,101) Unfavorable Budget T10 $ 105,000 50,000 $ 55,000 10,000 $ 45,000 $ 100 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.) 540 $ 45,000 25,000 $ 20,000 10,000 $ 10,000 $ 40 S40 Favorable Favorable Favorable Favorable Total Favorable Favorable Favorable Unfavorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Jay Banning, CEO and a major stockholder of Banning Incorporated, 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:
Sales
Variable cost
Contribution
Fixed cost
Operating income
Units sold
Unit selling price
CM Flexible budget variance
CM Sales volume variance
CM Sales quantity variance
CM Sales mix variance
Actual
T10
$ 132,000
61,700
$ 70,300
10,000
$ 60,300
1,200
$
S40
$ 58,695
28,000
$ 30,695
10,000
$ 20,695
1,505
T10
15,300 Favorable
Favorable
Favorable
$ (14,101) Unfavorable
Budget
T10
$ 105,000
50,000
$ 55,000
10,000
$ 45,000
$ 100
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.)
540
$ 45,000
25,000
$ 20,000
10,000
$ 10,000
$ 40
$40
Favorable
Favorable
Favorable
Favorable
Total
Favorable
Favorable
Favorable
Unfavorable
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