Where were costs in line and where were they out of line

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Reference no: EM131480581

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

525.00

$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

4,500F


Total Variable Expense

$12.00

$569,000

$600,000

$31,000F


Contribution Margin

$13.00

$556,000

5650,000

$94,000U


Less Fixed Expenses:


 

 

 

 


Fixed Factory OH

$100,000

$85,000

5100,000

$5,000U


Fixed S & A Expense

150,000

160,000

150,000

10,000U


Total Fixed Expense

$250,000

$225,000

$250,000

$5,000U


Income From Operations


 

$301,000

$400,000

599,000U


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."

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

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

What could have been done to produce more favorable numbers?

Reference no: EM131480581

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