Lloyd Publications established the following standard price and costs for a hard

Question

Lloyd Publications established the following standard price and costs for a hardcover picture book that the company produces.

Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 35,000 and 37,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 37,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

Lloyd Publications established the following standard price and costs for a hardcover picture book that the company produces.

Explanation / Answer

Master Budget Flexible Budget Actual Variance F/U $36,000 $35,000 $37,000 $37,000 $1,000 F Sales $13,21,200 $12,84,500 $13,57,900 $13,57,900 $36,700 F Less: variable costs Materials cost $2,95,200 $2,87,000 $3,03,400 $3,03,400 $8,200 U Labor cost $1,36,800 $1,33,000 $1,40,600 $1,40,600 $3,800 U Overhead cost $2,01,600 $1,96,000 $2,07,200 $2,07,200 $5,600 U selling, general and admin cost $2,48,400 $2,41,500 $2,55,300 $2,55,300 $6,900 U Total variable cost $8,82,000 $8,57,500 $9,06,500 $9,06,500 $24,500 U Less: fixed costs manufacturing overhead $1,29,000 $1,29,000 $1,29,000 $1,29,000 $0 0 selling, general and admin cost $48,000 $48,000 $48,000 $48,000 $0 0 Total fixed costs $1,77,000 $1,77,000 $1,77,000 $1,77,000 $0 0 Net income $2,62,200 $2,50,000 $2,74,400 $2,74,400 $12,200 F

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