Allard Manufacturing Company established the following standard price and cost d
ID: 2482917 • Letter: A
Question
Allard Manufacturing Company established the following standard price and cost data.
Sales price
$
10.00
per unit
Variable manufacturing cost
$
6
per unit
Fixed manufacturing cost
$
3,000
total
Fixed selling and administrative cost
$
1,000
total
Allard planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 units.
Assume that the actual sales price is $9.80 per unit and that the actual variable cost is $5.75 per unit. The actual fixed manufacturing cost is $2,500, and the actual selling and administrative costs are $1,025.
Required
a. & b.
Determine the flexible budget variances and classify the effect of each variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
Flexible Budget Variances
Sales
Unfavorable
Variable manufacturing
Favorable
Contribution margin
Favorable
Fixed manufacturing
Favorable
Fixed selling and admin cost
Unfavorable
Net income (loss)
Favorable
Allard Manufacturing Company established the following standard price and cost data.
Explanation / Answer
Total Budget Actual Flexible Budget Actual Amount Flexible Budget Variance Units 2000 2200 2200 2200 $ Sales Price/unit 10 9.8 22000 21560 -440 U Var Mfg/unit 6 5.75 13200 12650 550 F Fixed mfg 3000 2500 3000 2500 500 F Fixed SG&A 1000 1025 1000 1025 -25 U Net Income (Loss) 4800 5385 585 F * "U" stands for unfavourable & "F" stands for favourable
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