Jerry Tanner, CEO and a major stockholder of Tanner Company, was unhappy with its operating results in 2010. The company manufactures two environmentally friendly industrial cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results of the year (000s omitted except for the selling price per unit) follow:

		Actual Budget				Master Budget
	G80	H20	Total		G80	H20	Total
Sales	$85,500	$56,700	$142,200		$100,000	$40,000	$140,000
Variable costs	45,900	31,050	76,950		50,000	25,000	75,000
Contribution margin	$39,600	$25,650	$65,250		$50,000	$15,000	$65,000
Fixed costs	10,000	10,000	20,000		10,000	10,000	20,000
Operating income	$29,600	$15,650	$45,250		$40,000	$5,000	$45,000
Unit selling price					$100	$40
Units sold	900	1,350

Required
1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm.
2. Write a memo to Jerry Tanner about the implications of the variances that you just computed on planning and operationalcontrol.

Transcribed Image Text:

Required 1. Compute the contributi on margin flexible budget variance, contribution margin sales volume variance, contribution margin sal es quantity variance, and contribution margin sales mix variance for each producti on and for the firm Write a memo to Jerry Tanner about the implications of the variances that you just computed on planning and operational 2.