Question

Finch 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 $ 36.80 8.90 4.20 6.10 6.20 Labor cost overhead cost Selling, general, and administrative costs Planned fixed costs Manufacturing overhead Selling, general, and administrative $133,000 52,000 Finch planned to make and sell 35,000 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 34,000 and 36,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 36,000 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 35,000 34,000 36,000 Variable manufacturing costs Fixed costs

Answer 1

				Master	Flexible budgets		Volume variance
				Budget
Number of units				35,000	34,000	36,000
Sales revenue				1288000	1251200	1324800	36800	F
Variable manufacturing costs
material cost				311500	302600	320400	8900	U
labor cost				147000	142800	151200	4200	U
overhead cost				213500	207400	219600	6100	U
selling,general & administrative cost				217000	210800	223200	6200	U
contribution margin				399000	387600	410400	11400	U
fixed costs
manufacturing overhead				132000	132000	132000	0	N
selling,general & administrative cost				52,000	52,000	52,000	0	N
net operating income				215,000	203,600	226,400	11400	F