Data-2-Go manufactures and sells flash drives. The company produces only when it

Question

Data-2-Go manufactures and sells flash drives. The company produces only when it receives order and, therefore, has no inventories. The following information is available for the current month Actual Master Budget (based on actual of (based on budgeted 750,000 units) $3,105,000 800,000 units) $3,000,000 Sales revenue Less Variable costs Blank flash drives Direct labor Variable overhead Variable marketing and administrative 900,000 172,500 421,500 292,500 900,000 210,000 390,000 300,000 Total variable costs $1,786,500 $1,800,000 Contribution margin $1,318,500 $1,200,000 Less Fixed costs Manufacturing overhead Marketing Administrative 618,000 180,000 127,500 600,000 180,000 112,500 Total fixed cost $ 925,500 $892,500 Operating profits $393,000 $ 307,500

Explanation / Answer

Rate Flexible Sales Activity Master Actual Variance Budget Variance Budget No of Units 750000 750000 800000 Sales Revenue 3105000 292500 F 2812500 187500 UF 3000000 Variable cost: Blank flash drives 900000 56250 UF 843750 56250 F 900000 Direct Labour 172500 24375 F 196875 13125 F 210000 Variable Manufacturing Overhead 421500 55875 UF 365625 24375 F 390000 Variable Marketing and Admin Expenses 292500 11250 UF 281250 18750 F 300000 Total Variable Cost 1786500 99000 UF 1687500 112500 F 1800000 Contribution Margin 1318500 193500 F 1125000 75000 UF 1200000 Fixed Cost: Manufacturing Overhead 618000 18000 UF 600000 0 600000 Marketing 180000 0 180000 0 180000 Administrative 127500 15000 UF 112500 0 112500 Total Fixed Cost 925500 33000 UF 892500 0 892500 Operating Profit 393000 160500 F 232500 75000 UF 307500

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