70.2K

Verified Solution

Link Copied!

Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:

	Actual (based on actual orders for 450,000 units)						Master Budget (based on budgeted orders for 480,000 units)
Sales revenue		$	4,968,000					$	4,800,000
Less
Variable costs
Materials			1,440,000						1,440,000
Direct labor			276,000						336,000
Variable overhead			674,400						624,000
Variable marketing and administrative			468,000						480,000
Total variable costs		$	2,858,400					$	2,880,000
Contribution margin		$	2,109,600					$	1,920,000
Less
Fixed costs
Manufacturing overhead			988,800						960,000
Marketing			288,000						288,000
Administrative			204,000						180,000
Total fixed costs		$	1,480,800					$	1,428,000
Operating profits		$	628,800					$	492,000

Required:

Prepare a profit variance analysis for Osage, Inc. (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.)

OSAGE, INC. Profit Variance Analysis Actual Manufacturing Variances Marketing and Administrative Variances Sales Price Variance Flexible Budget Sales Activity Variance Master Budget Sales revenue $4,968,000 $4,800,000 Variable costs: Materials 1,440,000 1,440,000 Direct labor 276,000 336,000 Variable overhead 674,400 624,000 Variable marketing and administrative 468,000 480,000 Total variable costs $2,858,400 $0 $2,880,000 Contribution margin $2,109,600 $0 $1,920,000 Fixed costs: Manufacturing overhead 988,800 960,000 Marketing 288,000 288,000 Administrative 204,000 180,000 Total fixed costs $1,480,800 $0 $1,428,000 Operating profits

Answer & Explanation Solved by verified expert

See Answer