Assignment Objective: Complete variance analysis to analyze management decisions and what caused them. Assess an organization's success by comparing the budgeted plan to actual results.

Assignment Details:

A variance analysis to compare your budget to your actual results was completed at the end of the first quarter. Solve the variance analysis.

1. How was the flexible budget prepared? What is the flexible budgets purpose in variance?
2. What is the Sales Volume Variance? Is it favorable or unfavorable? What could have been potential cause of the variance in relation to the cost object? What would be a proactive step to mitigate effects of unfavorable OR optimize favorable variances?
3. What is the Selling Price Variance? Is it favorable or unfavorable? What could have been potential cause of the variance in relation to the cost object? What would be a proactive step to mitigate effects of unfavorable OR optimize favorable variances?
4. What is the Direct Material Price & Quantity Variances? Is it favorable or unfavorable? What could have been potential cause of the variance in relation to the cost object? What would be a proactive step to mitigate effects of unfavorable OR optimize favorable variances?
5. What is the Direct Labor Rate & Wage Variances?Is it favorable or unfavorable? What could have been potential cause of the variance in relation to the cost object? What would be a proactive step to mitigate effects of unfavorable OR optimize favorable variances?
6. What is the Variable Indirect Price & Efficiency Variances? Is it favorable or unfavorable? What could have been potential cause of the variance in relation to the cost object? What would be a proactive step to mitigate effects of unfavorable OR optimize favorable variances?
7. What is the Fixed Indirect Price & Volume Variances? Is it favorable or unfavorable? What could have been potential cause of the variance in relation to the cost object? What would be a proactive step to mitigate effects of unfavorable OR optimize favorable variances?

Material Used & Purchased Per Unit 4.4 Actual Sales Quantity AQ Material Price Per unit 25 00 23.75 Standard Sales Quantity sa Labor Hours 5 5.4 Actual Price AP Labor Rate 40 00 43.20 Standard Price SP Sales Volume 950 1000 Actual Cost Driver ACD Selling Price Per Unit 850 00 $ 800.00 Standard Cost Driver SCO Variable Indirect Cost Per Unit 100 000 00 $ 83,000.00 Actual Overhead Rate AOHR Fixed Indirect Costs 150,000.00 S 165,000.00 Predetermined Overhead Rate POHR Cost Driver 1750 5400 Variable POHR 21.05 15.37 Fixed POHR 31.58 30.56 Total Variance (AQXAPxACD) Price/Rate (AQxSPxACD) Flexible Quantity/Efficiency [AQXSPxSCD) Sales Volume (SQxSPXSCD) Actual vs DIRECT COSTS & SALES Actuals Variance Budget Variance Flexible Budget Variance Traditional Budget Unit sales 1000 0 1000 1,000 50 950 Sales revenue $800,000 $50,000.00 $850,000 $ $850,000 $ 12,500.00 $ 807.500.00 $ 7,500.00 Direct Material $104,500 $5,500.00 $ 110,000.00 10,000.00 100,000.00 $ 5,000.00 95,000.00 9,500.00 Direct Labor $233,280 $17 280.00 $216,000 16,000.00 $200,000 10,000.00 S 190,000.00 $ 43,280.00 (AQXPOHRXSCD) Total Variance (AQxAOHRxACD) Price/Rate (AQxPOHRXACD) Flexible (AQxPOHRxSCD) Production Indirect Costs Actual vs INDIRECT COSTS Actuals Variance Budget Efficiency Variance Flexible Budget Volume Variance Applied Budget Variable Indirect Costs $83,000 $30,684.21 $113,684 $8, 421.05 $105,263 $105,263 $ 17,000.00 Fixed Indirect costs $165,000 $15,000.00 $150,000 $0.00 $150,000 7.894.74 $ 157,894.74 $ 15,000.00 Units 1000 Price/Rate 1000 Volume 950 Total Actual Variance Flex Variance Budget Variance Sales $ 800,000.00 $ 50,000.00 S 850,000.00 42,500.00 $ 807,500.00 7,500.00 Direct Materials 104,500.00 $ 4,500.00 100,000.00 $ 5,000.00 95,000.00 $ 9,500.00 Direct Labor 233,280.00 $ 33,280.00 200,000.00 $ 10,000.00 190,000.00 $ 43,280.00 Other Variable 83,000.00 $ 22,263. 16 105,263.16 $ 5,263.16 100,000.00 $ $ 17,000.00 Contribution Margin $ 379,220.00 $ 65,516.84 S 444,736.84 $ 22,236.84 422,500.00 $ 43,280.00 Fixed $ 165,000.00 $ 15,000.00 S 150,000.00 $ $ 150,000.00 $ 15,000.00 Operating Income $ 214,220.00 $ 80,516.84 S 294,736.84 22,236.84 272,500.00 $ 58,280.00