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Finch Publications established the following standard price and costs for a hardcover picture book that the company producesRequired a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable

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Answer #1
Particulars Working (Actual - Standard) Flexible Budget Variance
Sales Revenue ( $35.30 - $36.30) * 35,000 $35,000 U
Variable manufacturing cost
Material ( $8.50 -$8.30) * 35,000 $7,000 U
Labor ($3.90 -$4.00 ) * 35,000 $3,500 F
Overhead ( $6.35 - $6.30) * 35,000 $1,750 U
Selling , general & admin costs ( $6.60 - $6.80) * 35,000 $7,000 F
Contribution margin (Note 1) $33,250 U
Fixed costs
Manufacturing overhead $115,000 - $130,000 $15,000 F
Selling , general & admin costs $51,000 - $45,000 $6,000 U
Net Income (Note 2) $24,250 U

Note 1 Contribution = $35,000 (U) + $7,000 (U) + $1,750 (U) - $3,500 (F) - $7,000 (F) = $33,250 U

Note 2 Net Income = $33,250 U + $6,000 (U) - $15,000 (F) = $24,250 U

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