Question

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Fanning Publications established the following standard price and costs for a hardcover picture book that the company produces. standard prioe and variable costs Sales price Materials cost Labor coat Overhead cost Selling, general, and administrative costs Planned fixed costs Manofacturing overhead Selling, general, and administrative 36.90 e.e0 3-70 6.10 6.40 $133,000 47,000 Fanning planned to make and sell 32,000 copies of the book. Required: a.-d. Prepare the pro forma income statement that would appear in the master budget and also fiexible budget income statements, assuming production volumes of 31,000 and 33,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 33,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None if there is no effect (e., zero varlance)) Manter Budget Flexible Budgets Volume Variances 33.000 Number of units. 32,000 31,000 Variable manufacturing costs Fixxed costs

Answer 1

Profarma income statements Master Budget Flexible Budget NO OF Units 32,000 31,000 33,000 Sales Price 36.90 1,180,800 1,143,900 1,217,700 Variable Manifacturing costs Material Cost Labour Cost Overhead Cost Selling, General and Administrative costs 8.80 3.70 6.10 6.40 281,600 118,400 195,200 204,800 272,800 114,700 189,100 198,400 290,400 122,100 201,300 211,200 Contribution Margin 380,800 368,900 392,700 Planned Fixed cost Manifacturing overhead Selling, General and Administrative costs 133,000 47,000 133,000 47,000 133,000 47,000 Net income 200,800 188,900 212,700

Volume Favorable or Variance Unfavorable Master Budget Flexible Budget Actual Budget NO OF Units 32,000 31,000 33,000 1,000 F Sales Price 36.90 1,180,800 1,143,900 1,217,700 36,900 F Variable Manifacturing costs Material Cost Labour Cost Overhead Cost Selling, General and Administrative costs 8.80 3.70 6.10 6.40 281,600 118,400 195,200 204,800 272,800 114,700 189,100 198,400 290,400 122, 100 201,300 211,200 8,800 3,700 6,100 6,400 u u u u Contribution Margin 380,800 368,900 392,700 11,900 f Planned Fixed cost Manifacturing overhead Selling, General and Administrative costs 133,000 47,000 133,000 47,000 133,000 47,000 None None Net income 200,800 188,900 212,700 11,900 f