Comprehensive Performance Report

Laptop Computing is a contract manufacturer of laptop computers sold under brand named companies. Presented are Laptopâs budgeted and actual contribution income statements for October.

The company has three responsibility centers: Production, Selling and Distribution, and Administration. Production and Administration are cost centers while Selling and Distribution is a profit center.

LAPTOP COMPUTING

Budgeted Contribution Income Statement

For Month of October
Sales (900 3 $250) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $225,000
Less variable costs
Variable cost of goods sold
Direct materials (900 3 $50) . . . . . . . . . . . . . . . . . . . . . . . $45,000
Direct labor (900 3 $20). . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
Manufacturing overhead (900 3 $15) . . . . . . . . . . . . . . . . 13,500
$ 76,500
Selling and Distribution (900 3 $60). . . . . . . . . . . . . . . . . . . 54,000
(130,500)
Contribution margin94,500
Less fixed costs
Manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Selling and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,500
(80,500)
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,000

LAPTOP COMPUTING
Actual Contribution Income Statement
For Month of October
Sales (1,000 3 $275) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$275,000
Less variable costs
Cost of goods sold
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$50,000
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25,000
Manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . .20,000
$95,000
Selling and Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . .88,000
(183,000)
Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92,000
Less fixed costs
Manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,000
Selling and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40,000
Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22,000
(100,000)
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ (8,000)

Required

a. Prepare a performance report for Production that compares actual and allowed costs.

b. Prepare a performance report for Selling and Distribution that compares actual and allowed costs.

c. Determine the sales price and the net sales volume variances.

d. Prepare a report that summarizes the performance of Selling and Distribution.

e. Determine the amount by which Administration was over or under budget.

f. Prepare a report reconciling budgeted and actual net income. Your report should focus on the performance of each responsibility cente