Odessa, Inc., reports the following information concerning operations for the most recent month: Actual (based on actual of 495 units) Master Budget (based on budgeted 550 units) Sales revenue $ 85,820 $ 93,500 Less Manufacturing costs Direct labor 12,422 13,200 Materials 10,110 12,100 Variable overhead 7,540 9,350 Marketing 4,537 5,225 Administrative 4,950 4,950 Total variable costs $ 39,559 $ 44,825 Contribution margin $ 46,261 $ 48,675 Fixed costs Manufacturing 4,260 4,400 Marketing 9,180 8,800 Administrative 8,755 8,800 Total fixed costs $ 22,195 $ 22,000 Operating profits $ 24,066 $ 26,675 There are no inventories. Required: Prepare a profit variance analysis for Odessa, Inc. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your final answers as a whole number.)
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Odessa, Inc., reports the following information concerning operations for the most recent month:
Actual (based on actual of 495 units) | |||||||||||
Sales revenue | $ | 85,820 | $ | 93,500 | |||||||
Less | |||||||||||
Direct labor | 12,422 | 13,200 | |||||||||
Materials | 10,110 | 12,100 | |||||||||
Variable |
7,540 | 9,350 | |||||||||
Marketing | 4,537 | 5,225 | |||||||||
Administrative | 4,950 | 4,950 | |||||||||
Total variable costs | $ | 39,559 | $ | 44,825 | |||||||
Contribution margin | $ | 46,261 | $ | 48,675 | |||||||
Fixed costs | |||||||||||
Manufacturing | 4,260 | 4,400 | |||||||||
Marketing | 9,180 | 8,800 | |||||||||
Administrative | 8,755 | 8,800 | |||||||||
Total fixed costs | $ | 22,195 | $ | 22,000 | |||||||
Operating profits | $ | 24,066 | $ | 26,675 | |||||||
There are no inventories.
Required:
Prepare a profit
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