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
![Odessa, Inc., reports the following information concerning operations for the most recent month:
Actual (based
on actual of
495 units)
$85,820
Master Budget
(based on
budgeted 550
units)
$93,500
Sales revenue
Less
Manufacturing costs
12,422
10,110
7,540
4,537
13,200
12,100
9,350
Direct labor
Materials
Variable overhead
Marketing
Administrative
5,225
4,950
$44,825
4,950
Total variable costs
Contribution margin
$39,559
$46,261
$48,675
Fixed costs
Manufacturing
Marketing
4,260
9,180
8,755
$22,195
4,400
8,800
8,800
$22,000
Administrative
Total fixed costs
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.)
ODESSA, INC.
Profit Variance Analysis
Master
Marketing and
Administrative Variance
Actual 495
Flexible
Manufacturing Variance
Sales Price Variance
Budget (Units) Sales Activity Variance Budget (550
Units)
Units)
Sales revenue
$
85,820
93,500
Variable costs:
Manufacturing costs:
Direct labor
12,422
13,200
Materials
10,110
12,100
Overhead
7,540
9,350
Marketing
4,537
5,225
Administrative
4,950
4,950
Contribution margin
Fixed costs:
2$
46,261
%24
$
48,675
Manufacturing
4,260
4,400
Marketing
9,180
8,800
Administrative
8,755
8,800
Operating profits
24
24,066
26,675](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb00e4a4c-3aad-4309-9995-d1f174bfd3b8%2F1940cb17-4f40-4041-a4f9-2b40c4a0c4bb%2Fzterr2i_processed.png&w=3840&q=75)
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