Part $3$ Performance reporting

This part relates to Module $23.$ I have flexible budget support material in the Module $23$ folder.

Crafts Inc., is a manufacturer of furniture.

The company has $2$ responsibility centers: Production and Selling and Distribution.

Production and administration are cost centers while Selling and Distribution is a profit center.

Presented below are the budgeted and actual contribution income statement for October along with applicable unit information.

Budgeted unit information:

Budgeted Units $814$

Sale price per unit $$208$

Direct material per unit $$43$

Direct labor per unit $$18$

Variable manufacturing overhead per unit $$13$

Variable selling and distribution per unit $$28$

Actual Units: $810$

Craft Inc.

Budgeted Contribution Income Statement

For Month of October

Sales $$169,312$

Less Variable costs

Variable cost of goods sold:

Direct materials $$35,002$

Direct labor $14,652$

Manufacturing overhead $10,582$ $$60,236$

Selling and distribution $22,792(83,028)$

Contribution Margin $86,284$

Less Fixed Costs:

Manufacturing overhead $40,000$

Selling and Distribution $30,000(70,000)$

Net Income$($Loss$)16,284$

Craft Inc.

Actual Contribution Income Statement

For Month of October

Sales $$230,000$

Less Variable costs

Variable cost of goods sold:

Direct materials $$40,000$

Direct labor $15,000$

Manufacturing overhead $13,500$ $$68,500$

Selling and distribution $38,000(106,500)$

Contribution Margin $123,500$

Less Fixed Costs:

Manufacturing overhead $39,000$

Selling and Distribution $31,000(70,000)$

Net Income$($Loss$)53,500$

Required:

$1.$ Prepare a flexible budget performance report for Production that compares actual and allowed costs.

$2.$ Prepare a flexible budget performance report for selling and distribution that compares actual and allowed costs.

$3.$ Determine the revenue variance.

$4.$ Determine the sales price variance.

$5.$ Determine the sales volume variance.

$6.$ Explain to management the areas that should be investigated. Explain why you picked these areas to look at$.$

$1.$ Prepare a flexible budget performance report for Production that compares actual and allowed costs.

Production Department

Flexible Budget Performance Report

For Month of October

Actual costs Flexible Budget Cost Flexible Budget Variances Designation U or F

Units

Direct Materials

Direct Labor

Variable Manufacturing overhead

Fixed Manufacturing

Total

$2.$ Prepare a flexible budget performance report for selling and distribution that compares actual and allowed costs.

Selling and Distribution Cost Center

Flexible Budget Performance Report

For Month of October

Actual costs Flexible Budget Cost Flexible Budget Variances Designation U or F

Units

Selling and Distribution:

Variable

Fixed

Total

$3.$ Determine the revenue variance.

$4.$ Determine the sales price variance.

$5.$ Determine the sales volume variance.

$6.$ Explain to management the areas that should be investigated. Explain why you picked these areas and your response must include details of the specifics of these variances.