The following data are available for the most recent year of operations for Slac
ID: 2590452 • Letter: T
Question
The following data are available for the most recent year of operations for Slacker & Sons. The revenue portion of the sales activity variance is $336,000F Master budget based on actual sales of 167,000 units: Revenue Materials Labor Variable manufacturing overhead and administrative costs Fixed manufacturing overhead and administrative costs $4,200,000 867,000 642,000 142,000 470,000 Required a. How many units were actually sold in the most recent period? (Do not round intermediate calculations.) I sales 167,000 units b. Prepare a sales activity variance for the most recent year for Slacker& Sons. (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.) SLACKER &SONS; Sales Activity Variance Flexible Budget S 4,536,000 Sales Activity Variance Master Budget Sales revenue S 4,200,000 Variable costs Materials Direct labor Variable manufacturing and administrative 867,000 642.000 142.000 S 1,651,000 S 2,549,000 Total variable costs Contribution margin Fixed costs S 4,536,000 Manufacturing overhead and administrative Total fixed costs Operating profits 470,000 S 470,000 S 470,000 S 470,000 S 2,079,000 S 4,066,000Explanation / Answer
Solution:
Activity Variance is the difference a revenue or cost item in the static/master budget and the same item in the flexible budget. An activity variance is due solely to the difference between the level of activity assumed (as per master budget) and the actual level of activity used in the flexible budget.
Sales Activity Variance = $336,000 F
It means sales revenue as per flexible budget is higher than the master budget by $336,000
Flexible Budget Revenue = $336,000 + $4,200,000 = $4,536,000
Since, the master budget is prepared on the basis of actual sales units 167,000 Units, all the figures will remain as except Sales Revenue, Contribution Margin and Operating Profit because as per flexible budget the sales revenue is higher than master budget. In other words,
SLACKER & SONS
Sales Activity Variance
Flexible Budget
Sales Activity Variance
Master Budget
Sales revenue
$4,536,000
$336,000
F
$4,200,000
Variable Costs:
Materials
$867,000
$0
$867,000
Direct labor
$642,000
$0
$642,000
Variable manufacturing and administrative
$142,000
$0
$142,000
Total Variable Costs
$1,651,000
$0
$1,651,000
Contribution Margin:
$2,885,000
$336,000
F
$2,549,000
Fixed Costs:
Manufacturing and administrative
$470,000
$0
$470,000
Total Fixed Costs
$470,000
$0
$470,000
Operating Profit
$2,415,000
$336,000
F
$2,079,000
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
SLACKER & SONS
Sales Activity Variance
Flexible Budget
Sales Activity Variance
Master Budget
Sales revenue
$4,536,000
$336,000
F
$4,200,000
Variable Costs:
Materials
$867,000
$0
$867,000
Direct labor
$642,000
$0
$642,000
Variable manufacturing and administrative
$142,000
$0
$142,000
Total Variable Costs
$1,651,000
$0
$1,651,000
Contribution Margin:
$2,885,000
$336,000
F
$2,549,000
Fixed Costs:
Manufacturing and administrative
$470,000
$0
$470,000
Total Fixed Costs
$470,000
$0
$470,000
Operating Profit
$2,415,000
$336,000
F
$2,079,000
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