Nottingham Forest Products reports the following information concerning operations for the most recent month: Master Budget (based on budgeted sales of 4,000 units) $ 188,000 Sales revenue Less Manufacturing costs Direct labor Materials Variable overhead Marketing Administrative Total variable costs Contribution margin Fixed costs Manufacturing Marketing Administrative Total fixed costs Actual (based on actual sales of 4,800 units) $ 228,700 50,302 31,520 16,608 7,805 7,215 $ 113,450 $ 115,250 38,930 14,860 9,510 $ 63,300 $ 51,950 39,000 27, 200 13,100 6,200 6,500 $ 92,000 $ 96,000 37,400 12,200 10,400 $ 60,000 $ 36,000 Operating profits There are no inventories. Required: Prepare a sales activity variance analysis for Nottingham Forest Products.
Nottingham Forest Products reports the following information concerning operations for the most recent month: Master Budget (based on budgeted sales of 4,000 units) $ 188,000 Sales revenue Less Manufacturing costs Direct labor Materials Variable overhead Marketing Administrative Total variable costs Contribution margin Fixed costs Manufacturing Marketing Administrative Total fixed costs Actual (based on actual sales of 4,800 units) $ 228,700 50,302 31,520 16,608 7,805 7,215 $ 113,450 $ 115,250 38,930 14,860 9,510 $ 63,300 $ 51,950 39,000 27, 200 13,100 6,200 6,500 $ 92,000 $ 96,000 37,400 12,200 10,400 $ 60,000 $ 36,000 Operating profits There are no inventories. Required: Prepare a sales activity variance analysis for Nottingham Forest Products.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Nottingham Forest Products reports the following information concerning operations for the most recent month:
Master Budget
(based on
budgeted sales
of 4,000
units)
$ 188,000
Sales revenue
Less
Manufacturing costs
Direct labor
Materials
Variable overhead
Marketing
Administrative
Total variable costs
Contribution margin
Fixed costs
Manufacturing
Marketing
Administrative
Total fixed costs
Operating profits
There are no inventories.
Sales revenue
Variable costs:
Manufacturing costs:
Direct labor
Materials
Variable overhead
Marketing
Administrative
Total variable costs
Contribution margin
Fixed costs:
Manufacturing
Marketing
Administrative
Total fixed costs
Operating profits
Actual (based
on actual sales
of 4,800 units)
$ 228,700
50,302
31,520
$
$
16,608
7,805
7,215
$ 113,450
$ 115,250
Required:
Prepare a sales activity variance analysis for Nottingham Forest Products.
Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for
unfavorable. If there is no effect, do not select either option.
38,930
14,860
9,510
$ 63,300
$ 51,950
46,800✔
32,640 →
15,720 ✔
7,440
7,800✔
$ 110,400 $
$
> Answer is complete but not entirely correct.
NOTTINGHAM FOREST PRODUCTS
Sales Activity Variance
Flexible
Master
Budget
Budget
(based on
actual of
(based on
budgeted
4,000 units)
4,800 units)
$ 225,600 $ 225,600 F ✓ $ 188,000
39,000
27,200
13,100
110,400
6,200
6,500
$ 92,000
$ 96,000
115,200 $ 115,200
37,400✔
12.200
10,400✔
60,000
55,200 $ 55,200
37,400
12, 200
10,400
$ 60,000
$36,000
Sales Activity
Variance
46,800 X U
32,640 X U
15,720 X U
7,440 X U
7,800 X U
U
F
X
3333333
39,000
27,200
13,100
6,200
6,500
92,000
✓ $
✓$ 96,000
U X
U
X
U
X
U X $
F ✓ $
37,400
12,200
10,400
60,000
36,000
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