BOSTON CREAMERY, Inc. Original Profit Plan For the Year 1973

Vanilla $ 0.4329 2,409,854 $ 1,043,226 Chocolate $ 0.4535 2,009,061 $ 911,109 Walnut $ 0.5713 48,883 $ 27,927 Buttercrunch $ 0.4771 262,185 $ 125,088 Cherry Swirl $ 0.5153 204,774 $ 105,520 Strawberry $ 0.4683 628,560 $ 294,355 Pecan Chip $ 0.5359 157,012 $ 84,143 Total $ 0.4530 5,720,329 $ 2,591,368

Breakdown of Budgeted Total Expenses Variable Costs Fixed Costs Total

Manufacturing $ 5,888,100 $ 612,800 $ 6,500,900 Delivery $ 187,300 $ 516,300 $ 703,600 Advertising $ 553,200 $ - $ 553,200 Selling $ - $ 368,800 $ 368,800 Administrative $ - $ 448,000 $ 448,000 Total $ 6,628,600 $ 1,945,900 $ 8,574,500

RECAP Sales $ 9,219,900 Variable Cost of Sales $ 6,628,600 Contribution Margin $ 2,591,300 Fixed Costs $ 1,945,900 Income from Operations $ 645,400

Standard Contribution Margin/Galon

Forecasted Gallon Sales

Forecasted Standard Contribution Margin

Rounding

$ 1,043,200 $ 911,100 $ 28,000 $ 125,000 $ 105,500 $ 294,400 $ 84,100 $ 2,591,300

Forecasted Standard Contribution Margin

BOSTON CREAMERY, Inc. Revise Profit Plan Budgeted Profit at Actual Volume For the Year 1973

Vanilla $ 0.4329 2,458,212 $ 1,064,160 Chocolate $ 0.4535 2,018,525 $ 915,401 Walnut $ 0.5713 50,124 $ 28,636 Buttercrunch $ 0.4771 268,839 $ 128,263 Cherry Swirl $ 0.5153 261,240 $ 134,617 Strawberry $ 0.4683 747,049 $ 349,843 Pecan Chip $ 0.5359 164,377 $ 88,090 Total $ 0.4539 5,968,366 $ 2,709,010

Breakdown of Budgeted Total Expenses Variable Costs Fixed Costs Total

Manufacturing $ 6,113,100 $ 612,800 $ 6,725,900 Delivery $ 244,500 $ 516,300 $ 760,800 Advertising $ 578,700 $ - $ 578,700 Selling $ - $ 368,800 $ 368,800 Administrative $ - $ 448,000 $ 448,000 Total $ 6,936,300 $ 1,945,900 $ 8,882,200

RECAP Sales $ 9,645,300 Variable Cost of Sales $ 6,936,300 Contribution Margin $ 2,709,000 Fixed Costs $ 1,945,900 Income from Operations $ 763,100

Standard Contribution Margin/Galon

Actual Gallon Sales

Standard Contribution Margin

Rounding

$ 1,064,200 $ 915,400 $ 28,600 $ 128,300 $ 134,600 $ 349,800 $ 88,100 $ 2,709,000

Forecasted Standard Contribution Margin

Gallon Cost

per gallon 0.04

10,000 400

8,000 320 Budget 8,000 350 Actual

(30) Unfavorable

BOSTON CREAMERY, Inc. ICE CREAM DIVISION Earnings Statement December 31, 1973

Month Year-to-Date Actual Flexible Budget Actual

Sales-Net Manufacturing Cost (Exhibit 2) $ 6,824,900 Delivery (Schedule A-4) Note Selling (Schedule A-5) Administrative (Schedule A-6)

Year-to-Date Flexible Budget

$ 6,725,900

BOSTON CREAMERY, Inc. ICE CREAM DIVISION EXHIBIT 2 Schedule A-2 Manufacturing Cost of Goods Sold December 31, 1973

Month Year-to-Date

Actual Flexible Budget Actual Variable Costs

Dairy Ingredients $ 3,679,900 $ 3,648,500 Milk Price Variance $ 57,300 $ - Sugar $ 599,900 $ 596,800 Sugar Price Variance $ 23,400 $ - Flavoring (Incuding Fruits and Nuts) $ 946,800 $ 982,100 Cartons $ 567,200 $ 566,900 Plastic Wrap $ 28,700 $ 29,800 Additives $ 235,000 $ 251,000 Supplies $ 31,000 $ 35,000 Miscellaneous $ 3,000 $ 3,000 Subtotal $ 6,172,200 $ 6,113,100

Fixed Costs Labor-Cartonizing and Freezing $ 425,200 $ 390,800 Labor-Other $ 41,800 $ 46,000 Repairs $ 32,200 $ 25,000 Depreciation $ 81,000 $ 81,000 Electricity and Water $ 41,500 $ 40,000 Spoilage $ 31,000 $ 30,000 Subtotal $ 652,700 $ 612,800

Total Costs $ 6,824,900 $ 6,725,900

99,000

Flexible Budget

Variance

31,400 U 31,400 57,300 U 57,300 3,100 U 3,100 23,400 U 23,400 (35,300) 300 U 300 misleading (1,100) (16,000) (4,000) -

34,400 U 34,400 efek positive ke delivery cost (4,200) 7,200 U 7,200 - 1,500 U 1,500 1,000 U 1,000

99,000

198,000

STEP 1 VANILA ICE CREAM

Regular Premium 1-Gallon 1-Gallon

Paper Plastic Container Container

Dairy Ingredients $ 0.53 $ 0.79 Sugar $ 0.15 $ 0.15 Flavor $ 0.10 $ 0.12 Production $ 0.10 $ 0.16 Warehouse $ 0.06 $ 0.08 Transportation $ 0.02 $ 0.025

Total Manufacturing $ 0.96 $ 1.325

Advertising $ 0.06 $ 0.06 Delivery $ 0.04 $ 0.04

Total Marketing $ 0.10 $ 0.10

Packaging $ 0.10 $ 0.25 Total Variable $ 1.16 $ 1.675 Selling Price $ 1.50 $ 2.40 Marginal Contribution per Gallon $ 0.34 $ 0.725

STEP 2 VANILA ICE CREAM SALES FORECAST IN GALLONS

January December

1 Gallon, Paper 100,000 100,000 1 Gallon, Plastic 50,000 50,000 2 Gallons, Paper 225,000 225,000 1 Gallon, Premium 120,000 120,000

495,000 495,000

STEP 4 THE PROFIT PLAN

Standard Marginal January Contribution Gallons

1 Gallon, Paper $ 0.3400 100,000 1 Gallon, Plastic $ 0.3050 50,000 2 Gallons, Paper $ 0.2650 225,000 1 Gallon, Premium $ 0.7250 120,000

$ 0.3957 495,000

Fixed Cost (see step 3) Manufacturing Expense Delivery Expense

Adm Expense Selling Expense Total Fixed Costs

Operating Profit

EXHIBIT A JANUARY

ACTUAL STANDARD Galon Contribution Sales Per Gallon

1 Gallon, Paper 90,000 $ 0.3400 1 Gallon, Plastic 95,000 $ 0.3050 2 Gallons, Paper 245,000 $ 0.2650 1 Gallon, Premium 90,000 $ 0.7250

Total 520,000 $ 0.3649 Forecasted at 495.000 gallons Variance

Planned Actual Gallons 495,000 520,000 Contribution $ 195,875 $ 189,750 Average Standard Contribution $ 0.3957 $ 0.3649

Variance due to volume 25,000 gallons F x 0,3957 $ 9,892.68 F

Variance due to Mix 0,0308 x 520,000 gallons $ 16,017.68 U

Total Variance $ 6,125.00 U

STEP 3 BUDGET FOR FIXED EXPENSES

January December Manufacturing Expenses

Labor $ 7,280 $ 7,920 Equipment repair $ 3,332 $ 3,348 Depreciation $ 6,668 $ 6,652 Taxes $ 3,332 $ 3,348 Total $ 20,612 $ 21,268

Delivery Expenses Salaries-general $ 10,000 $ 10,000 Salaries-drivers $ 10,668 $ 10,652 Helpers $ 10,668 $ 10,652 Supplies $ 668 $ 652 Total $ 32,004 $ 31,956

Administrative Expenses Salaries $ 5,167 $ 5,163 Insurance $ 1,667 $ 1,663 Taxes $ 1,667 $ 1,663 Depreciation $ 833 $ 837 Total $ 9,334 $ 9,326

Selling Expenses Repair $ 2,667 $ 2,663 Gasoline $ 5,000 $ 5,000

Total Salaries $ 5,000 $ 5,000 Total $ 12,667 $ 12,663

1,200,000 600,000 2,700,000 1,440,000 5,940,000

January Total Year USD

$ 34,000 $ 408,000 $ 15,250 $ 183,000 $ 59,625 $ 715,500 $ 87,000 $ 1,044,000 $ 195,875 $ 2,350,500

$ 20,612 $ 248,000 $ 32,004 $ 384,000

$ 9,334 $ 112,000 $ 12,667 $ 152,000 $ 74,617 $ 896,000 $ 121,258 $ 1,454,500

TOTAL Standard

Contribution $ 30,600 $ 28,975 $ 64,925 $ 65,250 $ 189,750 $ 195,875 $ 6,125 U

Difference 25,000 F $ 6,125 U $ 0.0308 U

Total

$ 88,000 $ 40,000 $ 80,000 $ 40,000 $ 248,000

$ 120,000 $ 128,000 $ 128,000 $ 8,000 $ 384,000

$ 62,000 $ 20,000 $ 20,000 $ 10,000 $ 112,000

$ 32,000 $ 60,000 $ 60,000 $ 152,000

Frank's schedule:

Favorable Variance Due to SalesVolume $ 117,700 F = standar contribution margin - forecasted standar profit marginPrice $ 12,000 F = (harga jual - harga standar) x volume penjualan / sales actual - sales revised budget

$ 129,700 FUnfavorable Variance Due to Operations

Manufacturing $ 99,000 U Delivery -$ 54,000 F Advertising $ 29,000 U Selling -$ 6,000 F Administration -$ 10,000 F

$ 58,000 UNet Variance-Favorable $ 71,700 F

MARKET SHARE AND SIZE VARIANCE

Market size variance = (actual industy sales in units - budgeted industry sales in units) x (budgeted market share %) x (budgeted average unit contribution margin) = (12180000-11440000)*(5720329/11440000)*(2591300/5720329) = $ 167,619 F

Market share variance = ((5968366/12180000)-(5720329/11440000))*12180000*(2591300/5720329) = -$ 55,259 U

Actual market share = 49%Budgeted market share = 50%Budgeted sales = 5,720,329 Actual sales = 5,968,366 248,037 Budgeted industry sales in units = 11,440,000 Actual industry sales in units = 12,180,000 740,000

Budgeted average unit contribution margin = $ 0.45

Market share variance = $ 55,259

SALES PRICE AND VOLUME VARIANCE

Sales price variance = (actual price - expected price) x quantity sold = (9657300-9645300) = $ 12,000 F

Sales volume variance = (actual volume - expected volume) x expected price = (2709000-2591300) = $ 117,700 F

CONTRIBUTION MARGIN AND MARGIN VOLUME VARIANCE

Contribution margin variance = actual contribution margin - budgeted contribution margin

Contribution margin volume variance = (actual quantity sold - budgeted quantity sold) x budgeted average unit contribution margin

Variance Due to Sales

Sales volume variance Budgeted Profit at Actual Volume

Standard Contribution

Margin/Galon Actual

Gallon Sales

Standard Contribution

Margin

Vanilla $ 0.4329 2,458,212 $ 1,064,160 Chocolate $ 0.4535 2,018,525 $ 915,401 Walnut $ 0.5713 50,124 $ 28,636 Buttercrunch $ 0.4771 268,839 $ 128,263 Cherry Swirl $ 0.5153 261,240 $ 134,617 Strawberry $ 0.4683 747,049 $ 349,843 Pecan Chip $ 0.5359 164,377 $ 88,090 Total $ 0.4539 5,968,366 $ 2,709,000 Forecasted Standard Contribution (at 5.720.329 gallons) $ 2,591,300 Variance $ 117,700 F

Planned Actual Difference Gallons 5,720,329 5,968,366 248,037 F Contribution $ 2,591,300 $ 2,709,000 $ 117,700 F Average Std. Contribution $ 0.4530 $ 0.4539 $ 0.0009 F

Variance Due to Volume248.037 gallonsF x $ 0,4530 = $ 112,360 FVariance Due to Mix$ 0,0009F x 5.968.366 gallons = $ 5,340 FTotal Variance = $ 117,700 F

Sales price varianceSales price variance = (actual price - expected price) x quantity sold

= (9657300-9645300) = $ 12,000 F

Total Variance Due to Sales = $ 129,700 F

Variance Due to Operations

Actual Profit = $ 705,100 exc. price varianceRevised Profit Plan = $ 763,100

= $ 58,000 U 5,968,366 Gallons

Month Actual Flexible Budget

$ 6,824,900 $ 6,725,900 U $ 99,000 Manufacturing Cost $ 706,800 $ 760,800 F -$ 54,000 Delivery $ 607,700 $ 578,700 U $ 29,000 Advertising $ 362,800 $ 368,800 F -$ 6,000 Selling $ 438,000 $ 448,000 F -$ 10,000 Administrative $ 8,940,200 $ 8,882,200 U $ 58,000

Variance Due to Operations REVISED Reclass to Milk Price Variance $ 57,300 U Selling Sugar Price Variance $ 23,400 U Selling Labor-Cartonizing and Freezing * $ 34,400 U Delivery

* memberi efek positive terhadap delivery cost Month

Actual Flexible Budget $ 6,824,900 $ 6,725,900 F -$ 16,100 Manufacturing Cost $ 706,800 $ 760,800 F -$ 19,600 Delivery $ 607,700 $ 578,700 U $ 29,000 Advertising $ 362,800 $ 368,800 U $ 74,700 Selling $ 438,000 $ 448,000 F -$ 10,000 Administrative $ 8,940,200 $ 8,882,200 U $ 58,000

Variance Due to Operations

Variance Due to Operations

Variance Due to Operations REVISED alternative 2 Reclass to Milk Price Variance $ 57,300 U Selling Sugar Price Variance $ 23,400 U Selling Labor-Cartonizing and Freezing * $ 54,000 U Delivery

* memberi efek positive terhadap delivery cost Month

Actual Flexible Budget $ 6,824,900 $ 6,725,900 F -$ 35,700 Manufacturing Cost $ 706,800 $ 760,800 F $ - Delivery $ 607,700 $ 578,700 U $ 29,000 Advertising $ 362,800 $ 368,800 U $ 74,700 Selling $ 438,000 $ 448,000 F -$ 10,000 Administrative $ 8,940,200 $ 8,882,200 U $ 58,000

BOSTON CREAMERY, Inc. ICE CREAM DIVISION Analysis of Variance

Sales and Marketing Department:Sales $ 129,700 F Marketing $ 6,000 F Advertising $ 29,000 U Sub Total Variance $ 106,700 F

Manufacturing and Operations Department:Manufacturing $ 99,000 U Delivery $ 54,000 F Administration $ 10,000 F Sub Total Variance $ 35,000 U

Total Variance $ 71,700 F

Variance Due to Operations

= standar contribution margin - forecasted standar profit margin= (harga jual - harga standar) x volume penjualan / sales actual - sales revised budget

(actual industy sales in units - budgeted industry sales in units) x (budgeted market share %) x (budgeted average unit contribution margin) (12180000-11440000)*(5720329/11440000)*(2591300/5720329)

((5968366/12180000)-(5720329/11440000))*12180000*(2591300/5720329)

actual contribution margin - budgeted contribution margin

(actual quantity sold - budgeted quantity sold) x budgeted average unit contribution margin

actual mix budgeted mix

Vanilla 2,409,854 2,458,212 0.411874 0.42127891595 $ 0.4329 (24,301) 45,235 Chocolate 2,009,061 2,018,525 0.338204 0.3512142396 $ 0.4535 (35,214) 39,506 Walnut 48,883 50,124 0.008398 0.00854548751 $ 0.5713 (502) 1,211 Buttercrunch 262,185 268,839 0.045044 0.04583390221 $ 0.4771 (2,249) 5,424 Cherry Swirl 204,774 261,240 0.043771 0.03579759136 $ 0.5153 24,522 4,575 Strawberry 628,560 747,049 0.125168 0.10988179176 $ 0.4683 42,725 12,763 Pecan Chip 157,012 164,377 0.027541 0.02744807161 $ 0.5359 298 3,648 Total 5,720,329 5,968,366 5,279 112,363

117,642 5339.631

Forecasted Gallon Sales

Actual Gallon Sales

Standard Contribut

ion Margin/G

alon Sales Mix Variance

Sales Volume

Variance