Fanning Publications established the following standard price and costs for a ha
ID: 2512048 • Letter: F
Question
Fanning Publications established the following standard price and costs for a hardcover picture book that the company produces.
Assume that Fanning actually produced and sold 29,000 books. The actual sales price and costs incurred follow:
Required
Standard price and variable costs Sales price $ 37.00 Materials cost 9.00 Labor cost 4.10 Overhead cost 6.20 Selling, general, and administrative costs 6.60 Planned fixed costs Manufacturing overhead $ 127,000 Selling, general, and administrative 45,000 Flexible Budget Variances Sales revenue Variable manufacturing costs Materials Labor Overhead Selling, general,and administrative costs Contribution margin Fixed costs Manufacturing overhead Selling, general, and administrative costs Net incomeExplanation / Answer
Answer
Flexible Budget [29000 books x Standard]
Actual
Variance
Sales Revenue
1073000
1044000
29000
Favourable
Variable manufacturing costs:
Material
261000
266800
5800
Unfavourable
Labor
118900
116000
2900
Favourable
Overhead
179800
181250
1450
Unfavourable
Selling, general & Admin cost
191400
185600
5800
Favourable
Contribution margin
321900
294350
27550
Unfavourable
Fixed Costs:
manufacturing overhead
127000
112000
15000
Favourable
Selling, general & Admin cost
45000
51000
6000
Unfavourable
Net Income
$149,900
$131,350
$18,550
Unfavourable
Flexible Budget [29000 books x Standard]
Actual
Variance
Sales Revenue
1073000
1044000
29000
Favourable
Variable manufacturing costs:
Material
261000
266800
5800
Unfavourable
Labor
118900
116000
2900
Favourable
Overhead
179800
181250
1450
Unfavourable
Selling, general & Admin cost
191400
185600
5800
Favourable
Contribution margin
321900
294350
27550
Unfavourable
Fixed Costs:
manufacturing overhead
127000
112000
15000
Favourable
Selling, general & Admin cost
45000
51000
6000
Unfavourable
Net Income
$149,900
$131,350
$18,550
Unfavourable
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