60.1K

Verified Solution

Link Copied!

Nottingham Forest Products reports the following information concerning operations for the most recent month:

	Actual (based on actual sales of 4,800 units)	Master Budget (based on budgeted sales of 4,000 units)
Sales revenue	$ 228,700	$ 188,000
Less
Manufacturing costs
Direct labor	50,302	39,000
Materials	31,520	27,200
Variable overhead	16,608	13,100
Marketing	7,805	6,200
Administrative	7,215	6,500
Total variable costs	$ 113,450	$ 92,000
Contribution margin	$ 115,250	$ 96,000
Fixed costs
Manufacturing	38,930	37,400
Marketing	14,860	12,200
Administrative	9,510	10,400
Total fixed costs	$ 63,300	$ 60,000
Operating profits	$ 51,950	$ 36,000

There are no inventories.

Required:

Prepare a profit 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.

\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{14}{|c|}{ NOTTINGHAM FOREST PRODUCTS } \\ \hline \multicolumn{14}{|c|}{ Profit Variance Analysis } \\ \hline & \multicolumn{2}{|c|}{Actual(4,800Units)} & ManufacturingVariance & MarketingandAdministrativeVariance & \multicolumn{2}{|c|}{ Sales Price Variance } & \multicolumn{2}{|c|}{FlexibleBudget(4,800Units)} & \multicolumn{3}{|c|}{ Sales Activity Variance } & \multicolumn{2}{|c|}{MasterBudget(4,000Units)} \\ \hline Sales revenue & $ & 228,700 & & & & F & $ & 225,600 & $ & 37,600 & F & $ & 188,000 \\ \hline \multicolumn{14}{|l|}{ Variable costs: } \\ \hline \multicolumn{14}{|c|}{ Manufacturing costs: } \\ \hline Direct labor & & 50,302 & U & & & & & 46,800 & & 7,800 & U & & 39,000 \\ \hline Materials & & 31,520 & F & & & & & 32,640 & & 5,440 & U & & 27,200 \\ \hline Overhead & & 16,608 & U & & & & P & 15,720 & & 2,620 & U & & 13,100 \\ \hline Marketing & & 7,805 & & U & & & 7 & 7,440 & & 1,240 & U & & 6,200 \\ \hline Administrative & & 7,215 & & F & & & & 7,800 & & 1,300 & U & & 6,500 \\ \hline Contribution margin & $ & 115,250 & U & F & & F & $ & 115,200 & & & F & $ & 96,000 \\ \hline \multicolumn{14}{|l|}{ Fixed costs: } \\ \hline Marketing & & 14,860 & & U & & & & 12,200 & & & 7 & & 12,200 \\ \hline Administrative & & 9,510 & & F & & & & 10,400 & & & 7 & & 10,400 \\ \hline Operating profit & $ & 51,950 & U & U & & F & $ & 55,200 & $ & 19,200 & F & $ & 36,000 \\ \hline \end{tabular}

Answer & Explanation Solved by verified expert

See Answer