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E7-20 (Flexible-Budget and Sales Volume Variances) Luster, Inc.,
produces the basic fillings used in many popular frozen desserts and
treats - vanilla and chocolate ice creams, puddings, meringues, and
fudge.
Luster uses standard costing and carries over no inventory from one
month to the next. The ice-cream product group's results for June
2014 were as follows:
Performance Report, June 2014
Actual
Static
Results
Budget
Units (pounds)
350 000
335 000
Revenues
$2 012 500
$1 976 500
Variable manufacturing costs
1 137 500
1 038 500
Contribution margin