Question

Problem 8-21A Determining and interpreting flexible budget variances

Use the standard price and cost data supplied in Problem 8-20A. Assume that Narcisco actually produced and sold 32,000 books. The actual sales price and costs incurred follow.

Actual price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Actual fixed costs Manufacturing overhead Selling, general, and administrative $87.00 18.40 8.80 12.70 14.00 $250,000 116,000

Required

1. Determine the flexible budget variances. Provide another name for the fixed cost flexible budget variances.

2. Indicate whether each variance is favorable (F) or unfavorable (U).

3. Identify the management position responsible for each variance. Explain what could have caused the variance.

4. Problem 8-20A Determining sales and variable cost volume variances

5. CHECK FIGURES

   Narcisco Publications established the following standard price and costs for a hardcover picture book that the company produces.

   

   Narcisco planned to make and sell 30,000 copies of the book.

Answer 1

Flexible budget variance

Revenue	96000 U
Variable cost
material	12800 U
Labor	6400 F
Overhead	3200 U
Selling, general, and administrative costs	12800 F
Contribution margin	92800 U
Fixed Cost
Manufacturing overhead	20000 F
Selling, general, and administrative costs	8000 U
Net operating income	80800 U

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