Question

Narcisco 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 $ 90.00 18.00 Labor cost 9.00 Overhead cost 12.60 Selling, general, and administrative costs 14.40 Planned fixed costs Manufacturing overhead Selling, general, and administrative $270,000 108,000 Narcisco planned to make and sell 30,000 copies of the book. Required a. d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 29,000 and 31,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 31,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) Master Budget Flexible Budgets Volume Variances Number of units Sales revenue Variable manufacturing costs 30,000 29,000 31,000 Materials Manufacturing Overhead 0 0 Fixed costs 0$

Answer 1

Materials Master and I Flexible Budgets. Volume Variance Number of units | 30,000 29000 | 31000 Sales Revenue $ 2700,000 $2610,000 $ 2790,000 l. 90.000/F Variable manufacturing costs Variable selling genenel and adminskecosts_9432,000 $647600 $ 446400 15 14 400 lu 19 540,000_0522000_44558.000$_180000 habor $ 270,000 $261000 4279000 9000u - Manufacturing Oveaboada 1_378,000_365400 9 390,600 8_12600 LU. 15_1080,000 $ 1044000 $1116000 19_36000 F fixed costs. - Manufacturing overhead. $ 270,000 $ ay0,000 $270000 $ 0 Nons __Fixed selling generel and adaministerekecek.s 108.000 .408.000___F_108 000 _o . Nane " Nel income 1$ 702000 19 666.000 $ 738 000$ 36000 LE Contribution Margin

Explanatione * Sales = (30000 890.00) = f 8700,000 129000 x$ 90.00) = $ 3610,000 5731000X $90.00) >$2790,000 * Vouciable selling general and administrative costs =( 30000 x $14:40) = $ 432000 199000 x 914,40 ) = $ 417600 >131000 X $14,40) = $ 446400 * Materials: - (30000 x $ 18.00) = $ 540.000 0129000 x $ 18.00) of 522000 (31000 x P 18.00) - $ 558000 * habor i -30000 y $9.00 ) > € 270,000 199000 x $9.00 ) = f 261,006 ( 31000 y $9.00 ) = f 279000 * Manufacturing Overhead: - (30000 X $12.60) of 378 000 (89000 x $12,60 ) = $ 365400 (31000 XP 12,60) = $ 390,600 I Volume Variance egr Master budged - Flexible budget Seles: 12100,000 - $ 26 10,000 - $ 90000

* Contribution margen af Sales Revenue Variable, manufced uring casts one * Net Controlu kien moegin Pered court) ibution margin - foxed LO