Discussion analyzing the flexible budget

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Acc: 09 Discussion Analyzing the Flexible Budget.

The President of Coopie Awards was analyzing the actual and budgeted results of operations for the current year (shown in the table below).

Coopie Awards Performance Report for Quarter Ending March 31
	Flexible Budget per Unit	Actual Results (45,000 Units)	Master Budget (50,000)	Variance
Sales	$25.00	$1,125,000	$1,250,000	$125,000U
Less variable expenses:
Direct Materials	4.50	212,500	225,000	12,500F
Direct Labor	3.75	175,750	187,500	11,750F
Variable Factory OH	2.25	110,250	112,000	2,250F
Variable S & A Expense	1.50	70,500	75,000	4,SOOF
Total Variable Expense	$12.00	5569,000	$600,000	531,000F
Contribution Margin	$13.00	$556,000	$650,000	594,000U
Less Fixed Expenses:
Fixed Factory OH	$100,000	$85,000	$100,000	$5,000U
Fixed S & A Expense	150,000	160,000	150,000	10,000U
Total Fixed Expense	5250,000	5225,000	5250,000	$5,000U
Income From Operations		$301,000	$400,000	$99,000U

She noticed several favorable variances and, in a meeting, gave accolades to the production manager. She also noticed that the sales variance was unfavorable and spent considerable time questioning the sales vice president. She stated "if production hadn't managed costs so well to cover for your lack of sales, we would have racked-up quite a large net loss for the year."

1. Do you agree with the president? Why or why not? Explain your point.

2. Where were costs in line and where were they out of line?

3. What could have been done to produce more favorable numbers?

4. Cite all resources and or references used.

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Reference no: EM13988506

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