Munoz Manufacturing Company established the following standard price and cost da

Question

Munoz Manufacturing Company established the following standard price and cost data: Sales price Variable manufacturing cost Fixed manufacturing cost Fixed selling and administrative cost $8.50 per unit $ 3.70 per unit $2,400 total 600 total Munoz planned to produce and sell 2,100 units. Actual production and sales amounted to 2,300 units. Required a. Determine the sales and variable cost volume variances. b. Classify the variances as favorable (F) or unfavorable (U) d. Determine the amount of fixed cost that will appear in the flexible budget. e. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity.

Explanation / Answer

a. & b. Sales volume variance = (Actual units sold - Budgeted units sold) x Budgeted price per unit
= (2,300 - 2,100) x $8.50 per unit = $1,700 Favorable

Variable cost volume variance = (Actual units sold - Budgeted units sold) x Budgeted cost per unit
= (2,300 - 2,100) x $3.70 per unit = $740 Unfavorable

c. Fixed cost that will appear in the flexible budget:

d. Fixed cost per unit:

Fixed manufacturing cost $2,400 Fixed selling and administrative cost 600 Total Fixed cost $3,000

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