Engineworks Co. provides the following fixed budget data for the year:Sales (20,000 units) …………………………….?$600,000Cost of sales:?? Direct materials …………………………….. $200,000? Direct labor …………………………………160,000? Variable overhead …………………………..60,000? Fixed overhead ……………………………..80,000500,000Gross profit …………………………………….?$100,000Operating expenses:?? Fixed ………………………………………..$12,000? Variable …………………………………….40,000 52,000Income from operations ………………………..?$ 48,000The company's actual activity for the year follows:??Sales (21,000 units)
…………………………….?$651,000Cost of goods sold:?? Direct materials …………………………….. $231,000? Direct labor …………………………………168,000? Variable overhead …………………………..73,500? Fixed overhead ……………………………..77,500550,000Gross profit …………………………………….?$101,000Operating expenses:?? Fixed ……………………………………….12,000? Variable …………………………………….39,500 51,500Income from operations ……………………….?$ 49,500Required:Prepare a flexible budget performance report for the year using the contribution margin format.
What will be an ideal response?
| ? | Budget | Actual | Variance |
| Units ……………………………… | 21,000 | 21,000 | ? |
| Sales ……………………………… | $630,000 | $651,000 | $ 21,000F |
| Variable costs: | ? | ? | ? |
| Direct materials …………………… | 210,000 | 231,000 | 21,000U |
| Direct labor …………………..…… | 168,000 | 168,000 | 0 |
| Variable overhead ………………… | 63,000 | 73,500 | 10,500U |
| Variable operating expenses ……… | 42,000 | 39,500 | 2,500F |
| Total variable costs …………..…… | $483,000 | $512,000 | $29,000U |
| Contribution margin ……………… | $147,000 | $139,000 | $ 8,000U |
| Fixed costs: | ? | ? | ? |
| Overhead ………………………… | $ 80,000 | $ 77,500 | $ 2,500F |
| Operating expenses ……………… | 12,000 | 12,000 | 0 |
| Total fixed costs ………………… | $ 92,000 | $ 89,500 | $ 2,500F |
| Income from operations ………… | $ 55,000 | $ 49,500 | $ 5,500U |
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