Free

90.2K

Verified Solution

Link Copied!

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

  

	Actual (based on actual orders for 463,000units)						Master Budget (based on budgeted orders for 506,000units)
Sales revenue		$	4,981,000					$	5,060,000
Less
Variable costs
Materials			1,505,000						1,518,000
Direct labor			289,000						354,200
Variable overhead			675,700						657,800
Variable marketing and administrative			494,000						506,000
Total variable costs		$	2,963,700					$	3,036,000
Contribution margin		$	2,017,300					$	2,024,000
Less
Fixed costs
Manufacturing overhead			991,400						961,300
Marketing			301,000						301,000
Administrative			217,000						181,300
Total fixed costs		$	1,509,400					$	1,443,600
Operating profits		$	507,900					$	580,400

Required:

Prepare a profit variance analysis for Osage, Inc., (Donot round intermediate calculations. Indicate the effect of eachvariance by selecting "F" for favorable, or "U" for unfavorable. Ifthere is no effect, do not select either option.)

OSAGE, INC. Profit Variance Analysis Actual Manufacturing Variances Marketing and AdministrativeVariances Sales Price Variance Flexible Budget Sales Activity Variance Master Budget Sales revenue $4,981,000 $5,060,000 Variable costs: Materials 1,505,000 1,518,000 Direct labor 289,000 354,200 Variable overhead 675,700 657,800 Variable marketing andadministrative 494,000 506,000 Total variable costs $2,963,700 $3,036,000 Contribution margin $2,017,300 $2,024,000 Fixed costs: Manufacturing overhead 991,400 961,300 Marketing 301,000 301,000 Administrative 217,000 181,300 Total fixed costs $1,509,400 $1,443,600 Operating profits $507,900 $580,400