The results for July for Brahms Sons follow Actual based on

The results for July for Brahms & Sons follow:  

Actual (based on actual sales of 100,000 units) Master Budget (based on budgeted sales 90,000 units)
Sales revenue $ 640,000 $ 765,000
Less
Variable costs
Direct material 100,000 76,500
Direct labor 95,000 135,000
Variable overhead 102,000 135,000
Marketing 18,400 22,500
Administrative 15,500 22,500
Total variable costs $ 330,900 $ 391,500
Contribution margin $ 309,100 $ 373,500
Less
Fixed costs
Manufacturing 138,300 132,000
Marketing 42,000 22,500
Administrative 98,800 96,000
Total fixed costs $ 279,100 $ 250,500
Operating profits $ 30,000 $ 123,000

Required:

Prepare a profit variance analysis for Brahms & Sons. ( 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.)

Solution

Profit variance analysis: Brahms & Sons. Actual (100,000 Units) Manu-facturingVariance Marketing &AdministrationVariance Sales PriceVariance FlexibleBudget (100,000Units) SalesActivityVariance MasterBudget (90,000Units) Sales revenue 640,000 210,000 U 850000 85000 F 765000 Variable costs: Manufacturing Direct material 100000 15000 U 85000 8500 U 76500 Direct labor 95000 55000 F 150000 15000 U 135000 Variable Overhead 102000 48000 F 150000 15000 U 135000 Marketing 18400 6600 F 25000 2500 U 22500 Administration 15500 9500 F 25000 2500 U 22500 Contribution margin 309100 88000 F 16100 F 210000 U 415000 41500 F 373500 Fixed Costs Manufacturing 138300 6300 U 132000                   -   132000 Marketing 42000 19500 U 22500                   -   22500 Administration 98800 2800 U 96000                   -   96000 Operating profit 30000 81700 F 6200 U 210000 U 164500    41,500.00 F 123000 *765000/90000*100000=850000