1.

Spring 20 Corp has two major divisions. Information for the divisions is below.

	Beer Division	Wine Division
Sales revenue	$160,000	$1,000,000
Operating income	$13,000	$200,000
Average assets	$200,000	$5,540,000

1. Calculate the profit margin for the Beer Division of the company.

2. Calculate the profit margin for the Wine Division of the company.

Round each to 2 decimal points and you must show your work to get credit.

2.

Spring 20 Inc. has prepared the operating budget for the first quarter of 2020. They forecast sales of $62,000 in January, $65,000 in February, and $70,000 in March. Forecasted expenses are below.

Variable Product Cost (40% of Sales)

Miscellaneous Expenses: (5% of Sales)

Fixed Selling & Admin Expense: $8,000 per month

Fixed Product Costs $6000 per month

Calculate total expenses on a flexible budget for the month of January. You must show your computation in order to receive credit

3. Spring Company reported actual operating income for the current year as $100,000. The flexible budget operating income for actual volume is $103,000, while the static budget operating income is $102,000.

1. What is the flexible budget variance for operating income?

2. Is it Favorable or Unfavorable?