Accounting Assignment

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AccountingAssignment

AccountingAssignment

Asmuch as the company went overboard on its budget allocation of abouthalf a billion dollars for its sales docket, the mix of the goodsthat were sold, for the most part, were different from what was, infact, considered in the budgeting. The occurrence of the deviance wasattributed to the changes between what was projected and the actualfigures that were obtained.This was the reason that the expectedoperating profit was not arrived at. The change was also the reasonthat both the break-even units and the sales dollars were noted toexceed the budgeted amount. The table below provides a representationof what was budgeted against the actual figures that were observedfrom the sales.

Particulars

Projected Sales in dollars (represented as %)

Actual Sales in dollars (represented as %)

Sinks

48

25

Vanities

32

33

Mirrors

20

42

Asnoted from the above data, a significant deviation away from theprojected value is evident from the sinks. It is also apparent thatthe mirrors, which were expected to be the least contributors to thesales, recorded higher values which depicted a shift from theforecasted.

Itis clear that the company was able to go above and beyond itsprojected sales level, however, when it came to ascertaining thecontribution of the sales items as per the planned values, theircontributions did not quite tally with the planned margin, given thedecline in the operating profit. The information retrieved from thecompany statements shed light on the deviances noted in the margin,and this is represented in the tables below

Item1

Item

Projected (in percentage)

Actual (in percentage)

CM ratio

52

41

Item2

Item

Projected (in $)

Planned (in $)

CM/ unit (weighted)

130

98

Giventhe information noted in the tables presented above, it is clear whythe break-even that was garnered exceeded the projected figures. Inthe bid to cover the fixed costs that were incurred, high amounts ofsales had to be achieved which would, in turn, ensure that there wasenough CM that would cover the costs as mentioned earlier.

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