Question

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Perez Manufacturing Comp

any established the following standard price and cost data:

Sales price	$	8.20	per unit
Variable manufacturing cost	$	3.50	per unit
Fixed manufacturing cost	$	2,500	total
Fixed selling and administrative cost	$	600	total

Perez planned to produce and sell 2,600 units. Actual production and sales amounted to 2,800 units.

Required

1. Determine the sales and variable cost volume variances.

2. Classify the variances as favorable (F) or unfavorable (U).

4. Determine the amount of fixed cost that will appear in the flexible budget.

5. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity.

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 a. Sales b. Variable manufacturing

Determine the amount of fixed cost that will appear in the flexible budget.

	Flexible Budget Fixed manufacturing cost Fixed selling and administrative costs Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity. (Round your answers to 2 decimal places.) Master Budget Flexible Budget Fixed cost per unit

Answer 1

Answers

• Requirements

		Volume Variance
a	Sales	$1,640	Favourable [(2800 - 2600) x $ 8.20]
b	Variable manufacturing	$700	Unfavourable [(2800 - 2600) x $ 3.50]

Flexible Budget
Fixed manufacturing cost	$2,500
Fixed selling % admin cost	$600

--Flexible budget FIXED cost = Planned master budget fixed cost

	Master Budget	Flexible Budget
Fixed Cost per unit	$                         1.19	$                                      1.11
	($2500+$600)/2600 units	($2500+$600)/2800 units