Classics, Ltd., details cars. Classics wants to compare this quarter\'s results

Question

Classics, Ltd., details cars. Classics wants to compare this quarter's results with those for last quarter, which is believed to be typical for operations. Assume that the following information is provided Last Quarter This Quarter 430 Number of detailings Revenues Variable costs 503 $68,540 27,820 $40,720 $68,600 31,620 $36,980 Contribution margin Required: Compute the flexible budget and sales activity variance and prepare a profit variance analysis. (Hint: Use last quarter as the master budget an this quarter as "actual.") (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Variable Cost Variance Flexible Budget Sales Activity Variance Master Budget Actual Sales Price Variance Sales revenue Less Variable Costs Contribution margin

Explanation / Answer

Answers

Actual

Variance

Flexible Budget

Variance

Master Budget

Sales Revenue

$68,600

Sales Price Variance $11,575.86 Unfavourable

$80,175.86

Sales Activity Variance $11,635.86 Favourable

$68,540

Less:

Variable costs

$31,620

Variable cost variance $922.93 Favourable

$32,542.93

Sales Activity Variance $4,722.93 Unfavourable

$27,820

Contribution margin

$36,980

Variable cost Variance $10,652.93 Unfavourable

$47,632.93

Sales Activity Variance $6,912.93 Favourable

$40,720

Actual

Flexible Budget

Master Budget

Sales Revenue

68600

=+(68540/430)*503

68540

Less:

Variable costs

31620

=+(27820/430)*503

27820

Contribution margin

=68600-31620

=80175.86-32542.93

=68540-27820

Actual

Variance

Flexible Budget

Variance

Master Budget

Sales Revenue

$68,600

Sales Price Variance $11,575.86 Unfavourable

$80,175.86

Sales Activity Variance $11,635.86 Favourable

$68,540

Less:

Variable costs

$31,620

Variable cost variance $922.93 Favourable

$32,542.93

Sales Activity Variance $4,722.93 Unfavourable

$27,820

Contribution margin

$36,980

Variable cost Variance $10,652.93 Unfavourable

$47,632.93

Sales Activity Variance $6,912.93 Favourable

$40,720

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