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Calculation of the budgeted profit for a specific month

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Calculation of the budgeted profit for a specific month. Details attached.

Smithton, Inc. makes and sells one product, the standard costs of which are as follows:

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The solution provides calculates for budgeted profits for a specific month.

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DEAR STUDENT,

Analysis of variances:
Budgeted profit for the month of May is 8450. Whereas the actual profit is 5150 reporting an unfavorable profit variance of 3300. The profit variance is due to the unfavorable sales variance. The sales variance is due to the sales price variance. Even though it is possible for the company to sell entire units of production, it could not sell the products at the budgeted selling price. Instead it can sell at the reduced price i.e., at the rate of 15.4 per unit because of the stiff competition in the ...

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