boston creamery, inc

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


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


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 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


= 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

boston creamery, inc

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