Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Textbook Question
Chapter 17, Problem 55P
Derive Amounts for Profit
Classics, Ltd., details cars. Classics wants to compare this quarter’s results with those for last quarter, which is believed to be typical for operations. Assume that the following information is provided:
Required
Compute the flexible budget and sales activity variance and prepare a profit variance analysis (like the one in Exhibit 16.5 of the previous chapter) in as much detail as possible. (Hint: Use last month as the
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PLEASE ANSWER THE FOLLOWING QUESTIONS:
Requirements
1. Compute the total sales-volume variance, the total sales-mix variance, and
the total sales-quantity variance. (Calculate all variances in terms of
contribution margin.) Show results for each product in your computations.
2. What inferences can you draw from the variances computed in
requirement 1?
Data table
Budget for 2020
Selling Variable Cost Cartons
Product Price per Carton Sold
Kostor $11.00 $
Limba $ 23.00 $
6.40
16.15
Actual for 2020
Selling Variable Cost Cartons
Price per Carton Sold
7.40 138,600
16.35 59,400
132,000 $11.60 S
88,000 $ 24.40 $
Classics, Ltd., details cars. Classics wants to compare this quarter’s results with those for last quarter, which is believed to be typical for operations. Assume that the following information is provided.
Last Quarter
This Quarter
Number of detailings
440
523
Revenues
$
72,160
$
68,800
Variable costs
27,920
31,920
Contribution margin
$
44,240
$
36,880
Required:
a. Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (Hint: Use last quarter as the master budget and this quarter as “actual.”)
b. What impact did the changes in number of detailings and average revenues (i.e., sales price) have on Classics, Ltd.’s contribution margin?
Campbell Industries has gathered the following information about the actual sales revenues and expenses for its
pharmaceuticals segment for the most recent year.
E (Click the icon to view the actual data.)
Prepare a segment margin performance report for the pharmaceutical segment. Calculate a variance and a variance
percentage for each line in the report. Round to the nearest hundredth for the variance percentages (for example, if
your answer is 16.2384%, round it to 16.24%).
Budgeted data for the same time period for the pharmaceutical segment are as follows (all data are in millions):
E (Click the icon to view the budgeted data.)
Begin by preparing the performance report through the contribution margin line. Next, complete the report through the segment margin line, and then, finally, complete the report through the operating income line. (Enter the variances as positive
numbers. Round the variance percentages to the nearest hundredth percent, X.XX%.)
Performance Report
Data table…
Chapter 17 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 17 - What complication arises in variance analysis when...Ch. 17 - Variance analysis can be useful in a manufacturing...Ch. 17 - How would you recommend accounting for variances...Ch. 17 - What does a manager learn by computing an industry...Ch. 17 - Why is there no efficiency variance for revenues?Ch. 17 - For what decisions would a manager want to know...Ch. 17 - If the sales activity or materials efficiency...Ch. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - What is the advantage of recognizing materials...
Ch. 17 - How could a professional sports firm use the mix...Ch. 17 - Prob. 12CADQCh. 17 - How could a hospital firm use the mix variance to...Ch. 17 - Prob. 14CADQCh. 17 - There is no reason to investigate favorable...Ch. 17 - Prob. 16CADQCh. 17 - Consider a firm in the sharing economy, such as...Ch. 17 - Prob. 18ECh. 17 - Prob. 19ECh. 17 - Prob. 20ECh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Prob. 22ECh. 17 - Industry Volume and Market Share Variances DB Ice...Ch. 17 - Olive Tree Products sold 72,000 units during the...Ch. 17 - Prob. 25ECh. 17 - Sales Mix and Quantity Variances A-Zone Media...Ch. 17 - Prob. 27ECh. 17 - Sales Mix and Quantity Variances The restaurant at...Ch. 17 - Sales Mix and Quantity Variances Chow-4-Hounds...Ch. 17 - Materials Mix and Yield Variances Stacy, Inc.,...Ch. 17 - Materials Mix and Yield Variances Johns...Ch. 17 - Labor Mix and Yield Variances Matts Eat N Run has...Ch. 17 - Flexible Budgeting, Service Organization KB is a...Ch. 17 - Prob. 34ECh. 17 - Prob. 35ECh. 17 - Sales Price and Activity Variances EZ-Tax is a tax...Ch. 17 - Write a memo to the senior manager of EZ-Tax...Ch. 17 - Variable Cost Variances The standard direct labor...Ch. 17 - Refer to the information in Exercise...Ch. 17 - Prob. 40PCh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Industry Volume and Market Share Variances:...Ch. 17 - Industry Volume and Market Share: Missing Data The...Ch. 17 - Sales Mix and Quantity Variances Lake Cellars...Ch. 17 - Analyze Performance for a Restaurant Dougs Diner...Ch. 17 - Nonmanufacturing Cost Variances FSBCU is a...Ch. 17 - Performance Evaluation in Service Industries Bay...Ch. 17 - Refer to the information in Problem...Ch. 17 - Prob. 49PCh. 17 - Refer to the data for the Peninsula Candy Company...Ch. 17 - Materials Mix and Yield Variances Plano Products...Ch. 17 - Pinnuck Products makes a liquid solvent using two...Ch. 17 - Labor Mix and Yield Variances Matthews Bros, is a...Ch. 17 - Refer to the information in Problem...Ch. 17 - Derive Amounts for Profit Variance Analysis...Ch. 17 - Flexible Budget Oak Hill Township operates a motor...
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