Managers at Lincoln, Inc. were cautiously optimistic about receiving their bonuses at year-end. Periodic communications from...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Managers at Lincoln, Inc. were cautiously optimistic about receiving their bonuses at year-end. Periodic communications from the top noted that the sales team had been exceeding targets throughout the year, which led to steady production activity to keep pace. Managers knew that a company profit margin of 10% meant bonuses for everyone. The production crew had been managing costs well but wasn't sure where final costs would land with the sales volume higher than planned. The following information outlines actual and budgeted results for the year. Actual Master Budget Sales volume (units) Selling price DM cost/unit DL cost/unit Variable-MOH cost/unit Variable SG&A cost/unit Fixed-MOH cost Fixed SG&A cost 52,000 $14.50 $3.10 $1.65 $1.50 $0.50 $205,000 $127,000 45,000 $14.00 $3.00 $1.70 $1.50 $0.50 $195,000 $122,500 Required a. Prepare Lincoln's flexible budget and actual income statement for the year. b. Determine the flexible budget variances and sales price variance, noting the amount and sign for each. c. What does the variance analysis suggest about the company's performance this year? What does it suggest specifically about the production department's performance? d. Did the company hit its target profit margin? Provide at least two ways in which this year's results might inform budgeting and objective-setting for the next year. Managers at Lincoln, Inc. were cautiously optimistic about receiving their bonuses at year-end. Periodic communications from the top noted that the sales team had been exceeding targets throughout the year, which led to steady production activity to keep pace. Managers knew that a company profit margin of 10% meant bonuses for everyone. The production crew had been managing costs well but wasn't sure where final costs would land with the sales volume higher than planned. The following information outlines actual and budgeted results for the year. Actual Master Budget Sales volume (units) Selling price DM cost/unit DL cost/unit Variable-MOH cost/unit Variable SG&A cost/unit Fixed-MOH cost Fixed SG&A cost 52,000 $14.50 $3.10 $1.65 $1.50 $0.50 $205,000 $127,000 45,000 $14.00 $3.00 $1.70 $1.50 $0.50 $195,000 $122,500 Required a. Prepare Lincoln's flexible budget and actual income statement for the year. b. Determine the flexible budget variances and sales price variance, noting the amount and sign for each. c. What does the variance analysis suggest about the company's performance this year? What does it suggest specifically about the production department's performance? d. Did the company hit its target profit margin? Provide at least two ways in which this year's results might inform budgeting and objective-setting for the next year.
Expert Answer:
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
The AFL-CIO has undertaken a study of the yearly salaries (in thousands of dollars) of 30 administrative assistants. The organization wants to predict salaries from several other variables. The...
-
It is late June, and Sandra, head of operations at Mintendo, and Bill, head of sales of We "R" Toys, are about to get together to discuss production and marketing plans for the next six months....
-
Which of the following expressions is NOT equivalent to 3[6a-3(1-a)-5(a+1)] ?
-
Calculate \(|38|\).
-
Earnings for several employees for the week ended March 12, 20--, are as follows: Calculate the employer's payroll taxes expense and prepare the journal entry as of March 12, 20--, assuming that FUTA...
-
$ 2,979,600 Check ?gure Increase or Decrease when 60% Difference in operating income: is used? Brie?y explain the reason for the difference. Also, if managers want to in?ate earnings in a parti...
-
Build this interface with Java and give me the code Model Welcome to Model ads Welcome User Login Form UserName Password Passowd Get Username get Password 2022 Model
-
The ACME organization conducts job interviews to hire people. The job interview has 20 questions. Currently, the reliability of the existing job interview questions is 0.58. However, ACME has found...
-
A plastic rod of length d = 1.5 m lies along the x -axis with its midpoint at the origin. The rod carries a uniform linear charge density = 4.5 nC/m. The point P is located on the postive y -axis at...
-
Sweet Baking Inc. sells on credit terms of net 30. Its accounts are, on average, four days past due. If annual credit sales are $9.75 million, what is the company's balance sheet amount in accounts...
-
You are asked to design a cylindrical steel rod 60.0 cm long, with a circular cross section, that will conduct 140.0 J/s from a furnace at 420.0 C to a container of boiling water under 1 atmosphere...
-
A cargo plane is moving with a horizontal velocity of 232 m/s and a height of 860 m above level ground when it releases a package ignoring air resistance. How much time in seconds will it take the...
-
OptiLux is considering Investing in an automated manufacturing system. The system requires an Initial Investment of $5.3 million, has a 20-year life, and will have zero salvage value. If the system...
-
Suppose you observe the following situation: Security Peat Company Re-Peat Company Expected Beta Return 1.20 11.00 0.80 9.50 ok ht nces Assume these securities are correctly priced. Based on the...
-
What is the mode?
-
What is an aged trial balance of accounts receivable? How does an auditor use it? How does an auditor determine that it is correctly aged?
-
What are some inherent risks of material misstatement associated with intangible assets ?
-
Refer to the Auditing in Practice feature What Was He Thinking? An Example of Poor Professional Judgment and Low Audit Quality. a. Briefly explain the common themes indicating poor professional...
-
Using $\mathrm{S}_{\text {base } 3 \phi}=100 \mathrm{kVA}$ and $\mathrm{V}_{\text {baseLL }}=600$ volts.
-
When evaluating the reasonableness of the accounting estimates as provided by the management of the client, the auditor shall perform the following except: (a) The auditor should evaluate, based on...
-
In which of the following situations the auditor is likely to audit accounting estimates: (a) Allowance for doubtful accounts (b) Reserve for obsolete inventory (c) Changes in the useful life of...
Study smarter with the SolutionInn App