Question

Thornton Manufacturing Company established the following standard price and cost data. Sales price Variable manufacturing cost Fixed manufacturing cost Fixed selling and administrative cost $ 8.80 per unit $ 3.60 per unit $2,800 total 800 total Thornton planned to produce and sell 2,900 units. Actual production and sales amounted to 3,100 units. Required a. Determine the sales and variable cost volume variances. b. Classify the variances as favorable (F) or unfavorable (U). d. Determine the amount of fixed cost that will appear in the flexible budget. e. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity Complete this question by entering your answers in the tabs below. Req A and B Req D Req E Determine the sales and variable cost volume variances and classify the variances as favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) Volume Variances Sales Variable manufacturing Reg A and B Req D

Answer 1

A and B.

sales	1,760	favorable
variable manufacturing	720	unfavorable

working:

sale volume variance = (3100 actual sale - 2900 budgeted sales)*$8.80 budgeted price per unit

=>$1,760.

variable cost volume variance = (3100 units - 2900)*$3.60 =>$720 unfavorable since cost was more than budgeted total variable cost.

D.

flexible budget:

fixed manufacturing cost	2,800
fixed selling and administrative cost	800

E.

	master budget	flexible budget
fixed cost per unit	$1.24	$1.16

working:

master budget =(2800+800) / 2900 units)

=>$1.24.

flexible budget = (2800+800) / 3100 units

=>$1.16.