Reference no: EM132894721

Question - BUDGET ANALYSIS FOR THE FIRST SIX MONTHS ENDED JUNE 30, 2021

	Budget	Actual	Variance
Sales units	445,000	460,000
Sales	$1,824,500	$1,863,000	$38,500
Variable costs	$694,200	$690,000	$4,200
Contribution margin	$1,130,300	$1,173,000	$42,700
Fixed costs (6 months)	$1,052,960	$1,051,600	$1,360
Net Income	$77,340	$121,400	$44,060

Target Volume: 890,000 units for the year

Target Profit: $250,000

Assumption: actual performance will dictate forecasts for the second half of the year.

A Board member observed that a profit of $121,400 for half of the year would mean an annual profit of $121,400*2 or $242,800. Assuming Hanson can attain but not exceed the target volume of 890,000 units, and that revenue and cost forecasts for all of 2021 should be based on the actual experience during the first half of 2021.

Based on the first half of 2021 we can forecast that the annual profit will be $242,800. What factors would dictate if the board should or should not be satisfied with the close to target annual profit of $242,800?