rework 0 Venon Publications established the following standard price and costs f

ID: 2408651 • Letter: R

Question

rework 0 Venon Publications established the following standard price and costs for a hardcover picture book that the company produces Standard price and variable coats Sales price Materials eost Labor coat 36.60 8.50 3.60 Gelling, general, and administrative costs 6.90 $127,000 2,000 Manufacturing overhead Selling, general, and adninistrative Assume that Vernon actually produced and sold 27.000 books. The actual sales price and costs incurred follow Actual price and varlable costs Sales priee 35.60 3.50 6.70 112,000 e cost Selling, genezal, and adniaisteative costs overhead Selling, general. and adninistetive U) (Select "None If there is no effect (l.e, zero variance).) the iet of chvce by eligvorable or utavorabe MacBook Air 2 3 5

Explanation / Answer

Answer

Unit Sale price = $ 36.6
Unit Variable cost = 8.5 + 3.6 + 6.2 + 6.9 = $ 25.2
Unit Contribution margin = 36.6 – 25.2 = $ 11.4

Unit Sale price = $ 35.6
Unit Variable cost = 8.7 + 3.5 + 6.25 + 6.7 = $ 25.15
Unit Contribution margin = 35.6 – 25.15 = $ 10.45

The same can also be computed from data entered by you as:
- 27000 – 5400 + 2700 – 1350 + 5400 = $ 25,650

Standard

Actual

Difference (variance)

Unit Contribution

$ 11.40

$ 10.45

$ 0.95

Units

27000

Total contribution margin (A)

$ 3,07,800.00

$ 2,82,150.00

$ 25,650.00

Total Fixed cost (B)

$ 1,79,000.00

$ 1,70,000.00

$ 9,000.00

Net Income ( A – B )

$ 1,28,800.00

$ 1,12,150.00

$ 16,650.00

This can also be computed by details entered by you:

Correct Contribution margin variance + 15000 (fixed manufacturing) – 6000(fixed selling)
= - 25650 + 15000 – 6000
= $ 16,650 Unfavourable.