Mountain Spring manufactures and sells varieties of sports drink (berry, lemon and orange) in bulk to upmarket. Budgeted and actual results for 2019 are as follows:

Mountain Spring
Income Statement
Year Ended 30 June 2019
			budget	actual
	sales revenue	$	18,680,000	19,079,500
	variable costs	$	(11,400,000)	(11,794,000)
	contribution margin	$	7,280,000	7,285,500
	non-variable costs	$	(5,580,000)	(5,680,000)
	net operating profit	$	1,700,000	1,605,500
Product Breakdown
	Berry
	sales volume	Boxes	500,000	400,000
	selling price	$ per box	7.00	6.90
	variable costs	$ per box	(4.50)	(4.40)
	contribution margin	$ per box	2.50	2.50
	Lemon
	sales volume	Boxes	900,000	1,100,000
	selling price	$ per box	7.00	6.90
	variable costs	$ per box	(4.00)	(4.30)
	contribution margin	$ per box	3.00	2.60
	Orange
	sales volume	Boxes	1,110,000	1,105,000
	selling price	$ per box	8.00	7.90
	variable costs	$ per box	(5.00)	(4.80)
	contribution margin	$ per box	3.00	3.10
	All Products Combined
	sales volume	Boxes	2,510,000	2,605,000
	market share		11.409%	13.025%
	selling price	$ per box	7.44	7.32
	variable costs	$ per box	(4.54)	(4.53)
	contribution margin	$ per box	2.90	2.80

The company’s director board is not happy with the net profit generate this year, as the actual net profit is less than the budgeted net profit. You are the consultant of the company and are require providing a report of variance analysis based on the results you have calculated in Q.1 and Q2. In your response, you should:

1. What recommendations do you have for future improvement?

Answer rating: 100% (QA)

Solution 1 Mountain Spring Flexible budget Actual Budget Flexible budget Units sold 2605000 2510000 9500000 Revenues 732 744 012 Variable cost 453 454 001 Contribution margin 28 29 01 Fixed costs Oper... View the full answer