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The Groton Company produces engine parts for car manufacturers. A new accountant intern at Groton...

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Question

Accounting

The Groton Company produces engine parts for car manufacturers. A new accountant intern at Groton has accidentally deleted the calculations on the company's variance analysis calculations for the year ended December31,2017. The following table is what remains of the data.

Performance Report

Year Ended December 31, 2017

Actual

Flexible-Budget

Flexible

Sales-Volume

Static

Results

Variances

Budget

Variances

Budget

Units sold

106,000

97,000

Revenues (sales)

$683,700

$315,250

Variable costs

430,000

145,500

Contribution margin

253,700

169,750

Fixed costs

178,950

95,000

Operating income

$74,750

$74,750

PrintDone

1.

Calculate all the required variances. (If your work is accurate, you will find that the total static-budget variance is $0.)

2.

What are the actual and budgeted selling prices? What are the actual and budgeted variable costs per unit?

3.

Review the variances you have calculated and discuss possible causes and potential problems. What is the important lesson learned here?

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