Question

Problem 8-20A Determining sales and variable cost volume variances LO 8-1, 8-3

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

Standard price and variable costs
Sales price	$	36.10
Materials cost		8.90
Labor cost		4.40
Overhead cost		6.00
Selling, general, and administrative costs		6.70
Planned fixed costs
Manufacturing overhead	$	126,000
Selling, general, and administrative		52,000

Baird planned to make and sell 24,000 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 23,000 and 25,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 25,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

Answer 1

Elexible BudqetActuat Master Variavce Budget 830, 3001 902,500 | $902,500 | 36100 Sals 866,400 tos vaviable cost $ 8,900 Mateials cot $ a,RR, 500 $304, Чоо $ 222.500 213,600 10,000 | $ 4,400 İlaboy colt. over headl cost 14,000 138, 000 150,000 ,50,00o 6000 elling ene $, 67,500, 00$6,Too $5% loo キ(6구, 500 6,700 キ1, 60, 800 and admin Total varbl ,24,000 5,78,000 $6,50,000 6,50,000 000 o.fixed cost

|$1,26,000! $1,26,000 เงา'as.ooo | $,06.000 | $ 5,0005,00050$52,00040 fotat fxed coit001,18, 00 ,00078,00 40 Manufactuxing oveyhead Seldinブノgeneral and acimin cost 1, 8,000 4,500 $74,500 | 10,100 Net income 464,400 $54,300