A publication company established the following standard price and costs for a h
ID: 2376063 • Letter: A
Question
A publication company established the following standard price and costs for a hardcover picture book that the company produces.
Standard price and variable costs:
Sales price $35
Materials 8.9
Labor 4.6
Overhead 6.3
General, selling, and administrative 7.4
Planned fixed costs:
Manufacturing $130,000
General, selling, and administrative 57,000
Assume that the company actually produced and sold 32,800 books. The actual sales price and costs incurred follow.
Actual price and variable costs:
Sales price $33
Materials 9.1
Labor 4.4
Overhead 6.4
General, selling, and administrative 7.2
Actual fixed costs:
Manufacturing $120,000
General, selling, and administrative 61,000
Determine the flexible budget variances:
Number of units 32,800 32,800 Flexible Budget Variances
Sales revenue
Variable manuf. costs
Materials
Labor
Overhead
Variable Selling, Gen. & Admin.
Contribution margin
Fixed costs
Manufacturing
Selling, Gen. & Admin.
Net income
Explanation / Answer
no. of units 32800 32800 Flexible variances
sales revenue 1148000 1082400 65600 (adverse)
variable cost
materials 291920 298480 6560(adverse)
labor 150880 144320 6560(favorable)
overhead 206640 209920 3280(adverse)
selling and 242720 236160 6560 (favorable)
administrative
manufacturing 130000 120000 10000(favorable)
selling and 57000 61000 4000 (adverse
admnstrative
net income 68840 12520 56320(adverse)
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