Sales price.........8.00 per unit variable manufacturing cost......4.00 fixed ma

Question

Sales price.........8.00 per unit variable manufacturing cost......4.00 fixed manufacturing costs.........3,000 fixed selling and admin. expenses......1,000 sexton planned to produce and sell 2,000 units. actual production and sales amounted to 2,200. A. determine the sales and variable cost volume variances. B. Classify the variances as favorable or unfavorable c. comment on the usefulness of the variances with respect to performance evaluation and identify the member of the management team most likely to be responsible for these variances. D. determine the amount of fixed costs that will appear in the flexible budget.

Explanation / Answer

a) determine the sales and variable cost volume variances.=8000 b) Classify the variances as favorable or unfavorable Favorable variance: When the actual cost incurred is less than the standard cost, the deviation is known as favorable variance. The effect of the favorable variance increases the profit. Unfavorable variance: When the actual cost is incurred is more than the standard cost, there is variance is known unfavorable or adverse variance. Unfavorable variance refers to deviation to the loss of business. d) determine the amount of fixed costs that will appear in the flexible budget. =16200

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