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

Question

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

Assume that Adams actually produced and sold 24,000 books. The actual sales price and costs incurred follow:

Required

a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

Standard price and variable costs Sales price $ 36.00 Materials cost 8.90 Labor cost 3.70 Overhead cost 6.10 Selling, general, and administrative costs 6.90 Planned fixed costs Manufacturing overhead $ 134,000 Selling, general, and administrative 48,000 Flexible Budget Variances Sales revenue Variable manufacturing costs Materials Labor Overhead Selling, general,and administrative costs Contribution margin Fixed costs Manufacturing overhead Selling, general, and administrative costs Net income

Explanation / Answer

a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable (F) or unfavorable (U).

Sales revenue 24000 U Variable manufacturing costs Material 4800 U Labour 2400 F Overhad 1200 U Selling,general and administrative expense 4800 F Contributiion margin 25200 U Fixed cost Manufacturing overhead 15000 F Selling,general and administrative expense 6000 U Net income 16200 U

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