he budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July is summarized as follows: a. Estimated sales for July by sales territory: Maine: Backyard Chef 310 units at $700 per unit Master Chef 150 units at $1,200 per unit Vermont: Backyard Chef 240 units at $750 per unit Master Chef 110 units at $1,300 per unit New Hampshire: Backyard Chef 360 units at $750 per unit Master Chef 180 units at $1,400 per u
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July is summarized as follows:
a. Estimated sales for July by sales territory:
| Maine: | |
| Backyard Chef | 310 units at $700 per unit |
| Master Chef | 150 units at $1,200 per unit |
| Vermont: | |
| Backyard Chef | 240 units at $750 per unit |
| Master Chef | 110 units at $1,300 per unit |
| New Hampshire: | |
| Backyard Chef | 360 units at $750 per unit |
| Master Chef | 180 units at $1,400 per unit |
b. Estimated inventories at July 1:
| Direct materials: | |
| Grates | 290 units |
| Stainless steel | 1,500 lbs. |
| Burner subassemblies | 170 units |
| Shelves | 340 units |
| Finished products: | |
| Backyard Chef | 30 units |
| Master Chef | 32 units |
c. Desired inventories at July 31:
| Direct materials: | |
| Grates | 340 units |
| Stainless steel | 1,800 lbs. |
| Burner subassemblies | 155 units |
| Shelves | 315 units |
| Finished products: | |
| Backyard Chef | 40 units |
| Master Chef | 22 units |
d. Direct materials used in production:
| In manufacture of Backyard Chef: | |
| Grates | 3 units per unit of product |
| Stainless steel | 24 lbs. per unit of product |
| Burner subassemblies | 2 units per unit of product |
| Shelves | 4 units per unit of product |
| In manufacture of Master Chef: | |
| Grates | 6 units per unit of product |
| Stainless steel | 42 lbs. per unit of product |
| Burner subassemblies | 4 units per unit of product |
| Shelves | 5 units per unit of product |
e. Anticipated purchase price for direct materials:
| Grates | $15 per unit |
| Stainless steel | $6 per lb. |
| Burner subassemblies | $110 per unit |
| Shelves | $10 per unit |
f. Direct labor requirements:
| Backyard Chef: | |
| Stamping Department | 0.50 hr. at $17 per hr. |
| Forming Department | 0.60 hr. at $15 per hr. |
| Assembly Department | 1.00 hr. at $14 per hr. |
| Master Chef: | |
| Stamping Department | 0.60 hr. at $17 per hr. |
| Forming Department | 0.80 hr. at $15 per hr. |
| Assembly Department | 1.50 hrs. at $14 per hr. |
Required:
1. Prepare a sales budget for July.
| Gourmet Grill Company Sales Budget For the Month Ending July 31 |
||||
|---|---|---|---|---|
| Product and Area | Unit Sales Volume |
Unit Selling Price |
Total Sales | |
| Backyard Chef: | ||||
| Maine | fill in the blank 1 | $fill in the blank 2 | $fill in the blank 3 | |
| Vermont | fill in the blank 4 | fill in the blank 5 | fill in the blank 6 | |
| New Hampshire | fill in the blank 7 | fill in the blank 8 | fill in the blank 9 | |
| Total | fill in the blank 10 | $fill in the blank 11 | ||
| Master Chef: | ||||
| Maine | fill in the blank 12 | $fill in the blank 13 | $fill in the blank 14 | |
| Vermont | fill in the blank 15 | fill in the blank 16 | fill in the blank 17 | |
| New Hampshire | fill in the blank 18 | fill in the blank 19 | fill in the blank 20 | |
| Total | fill in the blank 21 | $fill in the blank 22 | ||
| Total revenue from sales | $fill in the blank 23 |
2. Prepare a production budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
| Gourmet Grill Company Production Budget For the Month Ending July 31 |
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|---|---|---|
| Units | ||
| Backyard Chef | Master Chef | |
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fill in the blank 25 | fill in the blank 26 |
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fill in the blank 28 | fill in the blank 29 |
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fill in the blank 31 | fill in the blank 32 |
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fill in the blank 34 | fill in the blank 35 |
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fill in the blank 37 | fill in the blank 38 |
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