The Green Shop sells plants, fertilizers, and other garden products. The store has three departments: plants, chemicals, and tools. Certain information about the revenues and expenses of the departments for the year ended December 31, 20X1, is given below. Plants Chemicals Tools Allocated indirect expenses $ 10,400 $ 6,200 $ 5,800 Direct expenses 34,000 21,500 19,500 Cost of goods sold 57,650 54,850 44,650 Sales 119,150 91,450 52,350 Sales returns and allowances 2,150 450 350 Required: 1. Prepare a departmental income statement showing the contribution margin and the net profit for each department.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The Green Shop sells plants, fertilizers, and other garden products. The store has three departments: plants, chemicals, and tools. Certain information about the revenues and expenses of the departments for the year ended December 31, 20X1, is given below.
| Plants | Chemicals | Tools | |||||||
| Allocated indirect expenses | $ | 10,400 | $ | 6,200 | $ | 5,800 | |||
| Direct expenses | 34,000 | 21,500 | 19,500 | ||||||
| Cost of goods sold | 57,650 | 54,850 | 44,650 | ||||||
| Sales | 119,150 | 91,450 | 52,350 | ||||||
| Sales returns and allowances | 2,150 | 450 | 350 | ||||||
Required:
1. Prepare a departmental income statement showing the contribution margin and the net profit for each department.
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