Solomon Publications established the following standard price and costs for a ha

Question

Solomon Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs $ 36.90 8.40 4.50 6.10 7.20 Planned fixed costs Manufacturing overhead Selling, general, and administrative $135,000 45,000 Assume that Solomon actually produced and sold 29,000 books. The actual sales price and costs incurred follow: Actual price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs $ 35.90 8.60 4.40 6.15 7.00 Actual fixed costs Manufacturing overhead Selling, general, and administrative $120,000 51,000 Requirec a. & b. Determine the flexible budget varlances and also Indicate the effect of each varlance by selecting favorable (F) or unfavorable (U). (Select "None" If there is no effect (l.e., zero variance).) ible Variances Sales revenue Variable manufacturing costs Materials Labor Selling, general,and administrative costs Contribution margin Fixed costs Manufacturing overhead Selling, general, and administrative costs Net income

Explanation / Answer

Units 29000 WN: Actual Costs: 1 Flexible Budget: PU Amount Flexible Budget: PU Amount Sales Revenue 36.90 1070100 Sales Revenue 35.90 1041100 Variable Costs: Variable Costs: Material Cost 8.40 243600 Material Cost 8.60 249400 Labor Cost 4.50 130500 Labor Cost 4.40 127600 Overhead Cost 6.10 176900 Overhead Cost 6.15 178350 Selling, Admin Exp 7.20 208800 Selling, Admin Exp 7.00 203000 Total Variable Costs(A) 26.20 759800 Total Variable Costs(A) 26.15 758350 Fixed Costs: Fixed Costs: Manufacturing OH 135000 Manufacturing OH 120000 Selling, Admin Exp 45000 Selling, Admin Exp 51000 Total Fixed Costs(B) 180000 Total Fixed Costs(B) 171000 Total Costs(A+B) 939800 Total Costs(A+B) 929350 Budgeted Income 130300 Budgeted Income 111750 2 Variances: Flexible Actual Variance U/F Sales Revenue 1070100 1041100 29000 U Variable Costs: Material Cost 243600 249400 -5800 U Labor Cost 130500 127600 2900 F Overhead Cost 176900 178350 -1450 U Selling, Admin Exp 208800 203000 5800 F Contribution Margin 310300 282750 27550 F Fixed Costs: Manufacturing OH 135000 120000 15000 F Selling, Admin Exp 45000 51000 -6000 U Net Income 130300 111750 18550 F

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