The master budget at Cherrylawn Corporation at the beginning of the year was based on sales of 284,000 units with revenues of $3,408,000. Total variable costs were budgeted at $1,988,000 and fixed costs at $986,000. During the period, actual production and actual sales were 256,800 units. The actual revenues were $3,451,500. Actual variable costs were $5.60 per unit. Actual fixed costs were $1,016,000. Required: Prepare a profit variance analysis. Note: 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. Sales revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profits Actual Cherrylawn Corporation Profit Variance Analysis Manufacturing Variances Sales Price Variance Flexible Budget Sales Activity Variance Master Budget
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.
![The master budget at Cherrylawn Corporation at the beginning of the year was based on sales of 284,000 units with revenues of
$3,408,000. Total variable costs were budgeted at $1,988,000 and fixed costs at $986,000. During the period, actual production and
actual sales were 256,800 units. The actual revenues were $3,451,500. Actual variable costs were $5.60 per unit. Actual fixed costs
were $1,016,000.
Required:
Prepare a profit variance analysis.
Note: 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.
Sales revenue
Less:
Variable costs
Contribution margin
Less:
Fixed costs
Operating profits
Actual
Cherrylawn Corporation
Profit Variance Analysis
Manufacturing
Variances
Sales Price Variance Flexible Budget
Sales Activity
Variance
Master Budget](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4919c674-3453-4a4a-9801-20e6bddf35e7%2F346f51d5-e219-42fb-9a5f-8b7427f2a2bd%2Foaj9nf8_processed.jpeg&w=3840&q=75)
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