Part B

budgeted level of production 1,000selling price 750 $/unitmanufacturing variable cost 300 $/unitmarketing variable cost 100 $/unitmanufacturing fixed cost 150,000 $/mth alloc FC $/unit 150marketing fixed cost 50,000 $/mth

Inventory (units): 2010 2011 2012beg. inv. 0 200 100production 1000 900 1100sales 800 1000 1200end. inv. 200 100 0

COGS - $ 2010 2011 2012 COGS - $ 2010 2011 2012beg. inv. 0 60,000 30,000 beg. inv. 0 90,000 45,000manufacturing var cost 300,000 270,000 330,000 manufacturing var cost 300,000 270,000 330,000- - - - manufacturing fix cost 150,000 135,000 165,000COGS var av. for sale 300,000 330,000 360,000 COGS av. for sale 450,000 495,000 540,000end. inv. -60,000 -30,000 0 end. inv. -90,000 -45,000 0

prod volume variance - 15,000 -15,000COGS var 240,000 300,000 360,000 COGS 360,000 465,000 525,000

variable costing absorption costing2010 2011 2012 2010 2011 2012

sales 600,000 750,000 900,000 sales 600,000 750,000 900,000VC Mftg costs

COGS var 240,000 300,000 360,000 COGS 360,000 465,000 525,000mktg var 80,000 100,000 120,000total VC 320,000 400,000 480,000

Contr. Mg 280,000 350,000 420,000 Gross Mg 240,000 285,000 375,000% 46.7% 46.7% 46.7% % 40.0% 38.0% 41.7%FC Non-Mftg costs

Mftg FC 150,000 150,000 150,000 non-mftg VC 80,000 100,000 120,000Non-Mftg FC 50,000 50,000 50,000 Non-Mftg FC 50,000 50,000 50,000

Oper. Income 80,000 150,000 220,000 110,000 135,000 205,000% 13.3% 20.0% 24.4% % 18.3% 18.0% 22.8%

450,000 450,000

Difference2010 2011 2012

Operating Income 30,000 -15,000 -15,000end inv (units) 200 100 0mftg FC /unit 150 150 150mftg FC beg inv 0 30,000 15,000mftg FC end inv 30,000 15,000 0

30,000 -15,000 -15,000