Farm Yard Friends (FYF) manufactures plush toys. There are three products Duck,

Question

Farm Yard Friends (FYF) manufactures plush toys. There are three products Duck, Cow, and Chicken. The selling price of the Duck, Cow, and Chicken are $25, 533, and $19 respectively The direct materials costs for the Duck, Cow, and Chicken are 28%, 30%, and 23% of selling price respectively. The other variable costs, consisting of direct labour and variable overhead costs for the Duck, Cow, and Chicken are 35%, 39%, and 32% respectively Budgeted fixed manufacturing costs and fixed selling, general, and administrative costs at FYF are $3,500,000 and $2,200,000 respectively The following table summarizes the above information and budgeted sal es of each of the three products and budgeted market size for each of the three products. Duck Cow Chicken Selling Price Direct Materials Cost Other Variable Costs Contribution Margin $25.00 7.00 8.75 $33.00 9.90 12.87 $9.25 $10.23 $19.00 4.37 6.08 $8.55 Direct Materials Cost % Other Variable Costs % 28.00% 35.00%; 30.00% 39.00% 23.00% 32.00% Fixed Costs Manufacturing $3,500,000 $2,200,000 SGA Static Budget Sales Budget Market Size 250,000 240,000 340,000 6,000000 4,500,000 7,600,000

Explanation / Answer

a Static budget Income 19,74,700 b Flexible Budget Income 13,63,700 c Actual Income 806200 d Sales Volume Variance 611,000 U e Flexible Budget Variance 557,500 U Static Budget Sales Volume Variance Flexible Budget Flexible Budget Variance Actual Results Duck cow Chicken Total Duck cow Chicken Total Duck cow Chicken Total Units 250000 240000 340000 230000 190000 350000 230000 190000 350000 Revenue 6250000 7920000 6460000 20630000 -1960000 5750000 6270000 6650000 18670000 0 5750000 6270000 6650000 18670000 Variable Costs:    Direct Material Costs 1750000 2376000 1485800 5611800 591300 1610000 1881000 1529500 5020500 -493600 1782500 2069100 1662500 5514100    Other Variable Costs 2187500 3088800 2067200 7343500 757700 2012500 2445300 2128000 6585800 436100 1897500 2257200 1995000 6149700 Total Variable Costs 3937500 5464800 3553000 12955300 1349000 3622500 4326300 3657500 11606300 -57500 3680000 4326300 3657500 11663800 Contribution Margin 2312500 2455200 2907000 7674700 -611000 2127500 1943700 2992500 7063700 -57500 2070000 1943700 2992500 7006200 Fixed Costs:    Manufacturing 3500000 0 3500000 -300000 3800000    SGA 2200000 0 2200000 -200000 2400000 Tota Fixed Costs 5700000 0 5700000 -500000 6200000 Income 1974700 -611000 1363700 -557500 806200 Working: Static Budget Flexible Budget Actual Results Duck cow Chicken Total Duck cow Chicken Total Duck cow Chicken Total 250000 240000 340000 230000 190000 350000 230000 190000 350000 Sales Price 25 33 19 25 33 19 25 33 19 Revenue 6250000 7920000 6460000 5750000 6270000 6650000 5750000 6270000 6650000 Variable costs: Direct materials 28% 30% 23% 28% 30% 23% 31% 33% 25% Other Variable Costs 35% 39% 32% 35% 39% 32% 33% 36% 30% Direct materials ($) 1750000 2376000 1485800 1610000 1881000 1529500 1782500 2069100 1662500 Other variable Costs ($) 2187500 3088800 2067200 2012500 2445300 2128000 1897500 2257200 1995000

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