Robinson Company has two products, A and B. Robinson’s budget for August follows: Master Budget Product A Product B Sales $ 198,000 $ 360,000 Variable cost 108,000 288,000 Contribution margin $ 90,000 $ 72,000 Fixed cost 54,000 36,000 Operating income $ 36,000 $ 36,000 Selling price $ 110 $ 50 On September 1, these operating results for August were reported: Operating Results Product A Product B Sales $ 82,800 $ 430,560 Variable cost 50,600 356,040 Contribution margin $ 32,200 $ 74,520 Fixed cost 54,000 36,000 Operating income $ (21,800) $ 38,520 Units sold 920 8,280 Required: 1. For each product, determine the following variances (flexible budget variance, sales volume variance,sales quantity variance, and sales mix variance) measured in dollars of contribution margin:
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.
Robinson Company has two products, A and B. Robinson’s budget for August follows:
| Product A | Product B | |
|---|---|---|
| Sales | $ 198,000 | $ 360,000 |
| Variable cost | 108,000 | 288,000 |
| Contribution margin | $ 90,000 | $ 72,000 |
| Fixed cost | 54,000 | 36,000 |
| Operating income | $ 36,000 | $ 36,000 |
| Selling price | $ 110 | $ 50 |
On September 1, these operating results for August were reported:
| Operating Results | ||
|---|---|---|
| Product A | Product B | |
| Sales | $ 82,800 | $ 430,560 |
| Variable cost | 50,600 | 356,040 |
| Contribution margin | $ 32,200 | $ 74,520 |
| Fixed cost | 54,000 | 36,000 |
| Operating income | $ (21,800) | $ 38,520 |
| Units sold | 920 | 8,280 |
Required:
1. For each product, determine the following variances (flexible
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