James Manufacturing has the following information available for July: Actual Results Flexible Budget Variance Flexible Budget Sales Activity Variance Master Budget Units 12,000 ? 3,000 U ? Sales revenue ? $ 13,800 F ? ? ? Less: Variable manufacturing costs $ 89,500 $ 96,000 ? $ 119,000 Variable marketing and administrative ? $ 8,500 U ? $ 9,200 F $ 37,000 Contribution margin $ 56,000 ? ? $ 6,700 U ? What was James’s actual sales revenue for July? 62,700 44,200 56,000 59,000
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
James Manufacturing has the following information available for July:
| Actual Results | Flexible |
Flexible Budget | Sales Activity Variance | ||||||||||||||||
| Units | 12,000 | ? | 3,000 | U | ? | ||||||||||||||
| Sales revenue | ? | $ | 13,800 | F | ? | ? | ? | ||||||||||||
| Less: | |||||||||||||||||||
| Variable |
$ | 89,500 | $ | 96,000 | ? | $ | 119,000 | ||||||||||||
| Variable marketing and administrative | ? | $ | 8,500 | U | ? | $ | 9,200 | F | $ | 37,000 | |||||||||
| Contribution margin | $ | 56,000 | ? | ? | $ | 6,700 | U | ? | |||||||||||
What was James’s actual sales revenue for July?
62,700
44,200
56,000
59,000
Solution
Working note
Flexible budget variable marketing and administrative cost = 37000 -9200 = 27800.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
