Question

Finch Publications established the following standard price and costs for a hardcover picture book that the company produces. $ Standard price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Planned fixed costs Manufacturing overhead Selling, general, and administrative 36.30 8.80 3.60 5.50 6.20 $127,000 47,000 Finch planned to make and sell 35,000 copies of the book. Required: a.-d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 34,000 and 36,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 36,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

Answer 1

Number of Units Sales Master Budget Flexible Budget Volume Variances 35,000 34,000 36,000 $1,270,500 $1,234,200 $1,306,800 $36,300 F |(35,000 * $36.3)| (34,000 * $36.36,000 * $36.3) l($1,270,500 -$1,306,800) Variable manufacturing costs $o $8.800lU Material $3,600U Labor $308,000 $299,200 $316,800 (35,000 * $8.8) (34,000 * $8.8 36,000 * $8.8) $126,000 $122,400 $129,600 (35,000 * $3.6) (34,000 * $3.6 (36,000 * $3.6) $192,500 $187,000 $198,000 (35,000 * $5.5) (34,000 * $5.5 (36,000 *$5.5) $217,000 $210,800 $223,200 (35,000 * $6.2) (34,000 * $6. 2 36,000 * $6.2) $427,000 $414,800 $439,200 $5,500U Manufacturing Overhead $6,200 U Variable Selling, General & Administrative Costs Contribution Margin (Sales - Variable Costs) Fixed Costs Manufacturing overhead (Given) Fixed Selling, General & Administrative Costs (Given) $127,000 $47,000 $253,000 $127,000 $47,000 $240,800 $127,000 $47,000 $265,2001 SO None $0 None $12,200 F