You run a lab that performs a single blood test that calculates an overall 'wellness' assessment, providing a report that gives information on a number of key short and long term health indicators.
Before the start of the year you prepared a budget projecting sales, costs and profit on a monthly basis. This budget assumed monthly sales of 1700 units at a price of $33.50 each. You projected that variable costs would be $13 a unit in labor and $15 in materials and supplies per test.
At the end of January, you looked at your actual results for the month and prepared a flexible budget.
Here are the 3 budgets side by side.
Static Flexible Actual
Revenues $56,950 $47,737.50 $49,875
Variable Cost $47,600 $39,900 $41,500
Fixed Cost $6,000 $6,000 $6,250
Profit $3,350 $1,837.50 $2,125
What is contributing to the change in profit? In other words, explain where the profit differentials are coming from. Feel free to attach any calculations to support your answer.