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Chapter 19 Analyzing Finaneial Performance Reports 441

(mtrn
Munapemant
Pmt funi
1he
A4
Questions
Case
Vari 10-1
ance Analysis Problems
of var
al vain of vAriance from profit budget assuming that the Temple Division em-
analywin
nn
cont, accounting wyntem.
wnnlyn the Puhr
usry
ary and M»rch finaneinl
and Murel, 1 P r e p a r e
riable ntandard
I n thie eHee ynu
arn
ofthe Ai
nsked tn
Canpuny
he ( h p n r e d
with ite bdu
whieh iepartora
rmanee of
ahewn in the
oydanalynin of varianeefrom profitbudget auming that the Temple Division used
heounting nyuten, Under this asBumption, the actual cost of sales
ivieion
Pre atandardbecont
Temple
xhihit ,
amount wou

B4332,000. ((Can you derive this figure?)

iuuren prenented below.
Part A-February 19B8 volume
are Separate the mix and volume variance into
tadustry reulting from differencen in market penetration and variance resulting from
inaneinl results of th« "Tomul he var industry volune, Make the calculation for the variable cost system only. In-
Iuuw nre the data doeuribing
the ntual
1Division for the diffleren
dustry

Jume, February 1988:

f Feruary 19
Units (000)
Varialle 49t1 of tales Product A 600
Product B
Contritntio 650
fined manfacturing 0sts
552 Product C 1,500
229
Go88 profn
elling expefE 49 Part B-March 1988
Adrrninistrative experise S7
Net proit
r e h e data deaeribing the actual financial results for the Temple Division for the
1988,.
ales month ofMarch
Prodct Unit ales Price
120 $0,95
Doliar Sales Income Statement
10 S114 Sales $498
1,90 Varlable cost of sales
150 2,80) 2A7 278
otal A00 420 Contribution 220
781 Fixed manufacturing costs
Gross profit 150
Production Selling expense 45
Manufacturing Cost Administrative expense 20
Units Net profit 85
Produet Varlable
Produced Material Labor Overhead Total Sales
150 80 120 40 S140 Product Unit Sales Price Dollar Sales
30 91 5 147
20 190 15 90 .10 $99
olal 400 361
23 70 2.10 147
105 $22
80 3.1S 252
Total 240 498
uetaancr
Production
Manufacturing Cost
Units a
Vartable
Product Produced Material Labor Overhead Total
A 90 40 8 $17 65
Ihia CA
WA repared and 80 55 10 18 83
copyrlghed by Joln Dearden 19 177
T00 150 8
Total 270 245 26 54 325
 Process
Control

Part Two
The Management Chapter 10 Analyzing Financial Performance Reports
442 443

1988 follows:
Question statistics for January were as

A. The
questions posed
at the end of Part
volume for Mawl
actunl
cost of sales H
Answer the same

would be $340,500 in March. Industry using ful lan Sales (units) 1,000 1,000 ,000 3,000
dard costing Crocker Company for January 1988 Sales price $0.13
1. The budget for the
profit
$0.22 $0.22 $0.3
Production 1,000 1,000 2,000 2,000
Units (000) Actual manufacturing costs (000):
Material $360
Product A 500
Labor 200
Product B 600
Product C 1,000 Overhead 530

(S000)
Sales Question
Standard cost of sales $2,500
1,620
Gross profit
880 Drepare an analysis of variance between actual profits and budgeted profits for January 1988.
Selling expense $250
Research and development expense 300
Administrative expense 120
Total expense
Net profit before taxes
670
210
The product information used in developing the budget was as follows:

Sales-units (000) 1,000 2,000 3,000 4,000

Price per unit $0.15 $0.20 $0.25 $0.30
Standard cost per unit:
Material 0.04 0.05 0.06 0.08
Direct labor 0.02 0.02 0.03 0.04
Variable overhead 0.02. O.03 0.03
Total variable cost 0.08 0.10 0.12 0.17
Fixed overhead ($000) 20 60 60 160
Total standard cost per unit 0.10 0.13 0.14 0.21
anndusiratv ctanca

The actunl revenues und costs

for January 1988 were as follow8:

($000)
Sales $2,160
Standard cost of sales
Net standard cost of
1,420
variances
Actual cost of sales 1S80
Gross proli 580
Selling expense $290
Research and
Administrativedevelopment
expenses expense 250
10
Total expense 650
Netloss S(70)