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(Solved): Target Company's actual results for the period were: The company planned to produce and sell 375,0 ...
Target Company's actual results for the period were: The company planned to produce and sell 375,000 at each. At that volume, variable Manufacturing costs were budgeted at , and variable Marketing \& Admin costs were budgeted at each. In addition, the company expected an operating profit of . a.) Refer to Target Company, create the Master/Planning Budget. b.) Refer to Target Company, prepare the Flexible Budget. c.) Calculate the Sales Price Variance. d.) Calculate the Sales Volume Variance. e.) Calculate the Variable Manufacturing Cost Variance. f.) Calculate the Variable Marketing \& Admin Cost Variance.
Expert Answer
Create the Master/Planning Budgera) Master/Planning Budget:Sales:Volume: 375,000 unitsPrice: $6 per unitTotal Sales Revenue: 375,000 units * $6 = $2,250,000Variable Costs:Manufacturing:Volume: 375,000 unitsCost per unit: $2.50Total Manufacturing Costs: 375,000 units * $2.50 = $937,500Marketing & Admin:Volume: 375,000 unitsCost per unit: $2.00Total Marketing & Admin Costs: 375,000 units * $2.00 = $750,000Total Variable Costs: $937,500 (Manufacturing) + $750,000 (Marketing & Admin) = $1,687,500Fixed Costs:Manufacturing: $400,000Marketing & Admin: $32,000Total Fixed Costs: $400,000 + $32,000 = $432,000Operating Profit: $62,500Master/Planning Budget:Sales Revenue: $2,250,000Variable Costs: $1,687,500Fixed Costs: $432,000Operating Profit: $62,500As per information given all budgetary tables shown