Problem 16-51 (Algo) Solve for Master Budget Given Actual Results (LO 16-2, 4) A new accounting intern at Gibson Corporation lost the only copy of this period's master budget. The CFO wants to evaluate performance for this period but needs the master budget to do so. Actual results for the period follow. Sales volume Sales revenue Variable costs Manufacturing Marketing and administrative Contribution margin Fixed costs Manufacturing Marketing and administrative Operating profit 130,000 units $728,000 160, 160 65,520 $502,320 212,200 114,550 $175,570 The company planned to produce and sell 113,100 units for $5.00 each. At that volume, the contribution margin would have been $395,850. Variable marketing and administrative costs are budgeted at 10 percent of sales revenue. Manufacturing fixed costs are estimated at $2.00 per unit at the normal volume of 113,100 units. Management notes, "We budget an operating profit of $1.00 per unit at the normal volume."
Problem 16-51 (Algo) Solve for Master Budget Given Actual Results (LO 16-2, 4) A new accounting intern at Gibson Corporation lost the only copy of this period's master budget. The CFO wants to evaluate performance for this period but needs the master budget to do so. Actual results for the period follow. Sales volume Sales revenue Variable costs Manufacturing Marketing and administrative Contribution margin Fixed costs Manufacturing Marketing and administrative Operating profit 130,000 units $728,000 160, 160 65,520 $502,320 212,200 114,550 $175,570 The company planned to produce and sell 113,100 units for $5.00 each. At that volume, the contribution margin would have been $395,850. Variable marketing and administrative costs are budgeted at 10 percent of sales revenue. Manufacturing fixed costs are estimated at $2.00 per unit at the normal volume of 113,100 units. Management notes, "We budget an operating profit of $1.00 per unit at the normal volume."
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Question
Please Do not Give image format
Transcribed Image Text:Problem 16-51 (Algo) Solve for Master Budget Given Actual Results (LO 16-2, 4)
A new accounting intern at Gibson Corporation lost the only copy of this period's master budget. The CFO wants to evaluate
performance for this period but needs the master budget to do so. Actual results for the period follow.
Sales volume
Sales revenue
Variable costs.
Manufacturing
Marketing and administrative
Contribution margin
Fixed costs
Manufacturing
Marketing and administrative
Operating profit
130,000 units
$728,000
160, 160
65,520
$502,320
212, 200
114,550
$175,570
The company planned to produce and sell 113,100 units for $5.00 each. At that volume, the contribution margin would have been
$395,850. Variable marketing and administrative costs are budgeted at 10 percent of sales revenue. Manufacturing fixed costs are
estimated at $2.00 per unit at the normal volume of 113,100 units. Management notes, "We budget an operating profit of $1.00 per unit
at the normal volume."
Required:
a. Construct the master budget for the period.
b. Prepare a profit variance analysis.
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare a profit variance analysis. (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
GIBSON CORPORATION
Profit Variance Analysis
Sales revenue
Variable costs:
Manufacturing
Marketing and administrative
Contribution margin
Fixed costs:
Manufacturing
Marketing and administrative
Operating profit
Actual
$ 728,000
160,160
65,520
$ 502,320
212,200
114,550
$ 175,570
Marketing and
Manufacturing Variances Administrative Variances
U
U
U
U
U
U
U
U
Sales Price Variance
$
$
$
78,000 F
78,000 F
78,000 F
Flexible
Budget
$ 650,000
226,200
56,550
Sales Activity Variance Master Budget
0
0
F
ມ
U
U
F
EF
$
$
$
565,500
113,100
56,550
395,850
226,200
56,550
113,100
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education