Ellis Animal Health, Inc., produces a generic medication used to treat cats with feline diabetes. The liquid medication is sold in 100 ml vials. Ellis employs a team of sales representatives who are paid varying amounts of commission. Given the narrow margins in the generic veterinary drugs industry, Ellis relies on tight standards and cost controls to manage its operations. Ellis has the following budgeted standards for the month of April 2017: $ 8.30 $ 3.60 $ 15.00 100 Average selling price per vial Total direct materials cost per vial Direct manufacturing labor cost per hour Average labor productivity rate (vials per hour) Sales commission cost per vial Fixed administrative and manufacturing overhead $ 0.72 $990,000 Ellis budgeted sales of 700,000 vials for April. At the end of the month, the controller revealed that actual results for April had deviated from the budget in several ways: - Unit sales and production were 90% of plan. - Actual average selling price decreased to $8.20. Productivity dropped to 90 vials per hour. - Actual direct manufacturing labor cost was $15.20 per hour. - Actual total direct material cost per unit increased to $$3.90. · Actual sales commissions were $0.70 per vial. - Fixed overhead costs were $110,000 above budget.

Required: Calculate all variances and prepare an operating statement for the month endedJune 2015  by using the following table format.   Sales variances £ Favourable (F)/Adverse (A) Sales price variance:                       Sales volume variance:                       Total sales variance       Direct material variances £ Favourable (F)/Adverse (A) Material price variance:                       Material usage variance:                       Total direct material variance       Direct labour variances £ Favourable (F)/ Adverse (A) Labour rate variance:                       Labour efficiency variance:                       Total direct labour variance       Variable overhead variances £ Favourable (F)/ Adverse (A) Variable…

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Gauging the Favorableness of Variances When variances occur, they are described as being either favorable or unfavorable. When actual activity consumes more time or money than initially planned, an unfavorable variance exists. However, when actual activity consumes less time or money than initially planned, a favorable variance exists. Note that the terms favorable and unfavorable are used, rather than saying that a variance is good or bad, because until the cause of a variance is discovered, it is not clear whether a variance is either good or bad. Note: Use the minus sign to indicate negative values (when the budgeted amount is greater than the actual). If a company calculates that the actual cost for the actual hours worked by employees was $4,600,000, and the amount budgeted for those hours actually worked was $4,800,000, the actual cost for hours worked less the budgeted cost for hours worked is $ less than ✔ the budgeted cost at actual hours worked. What type of variance is this?…