Benson Publications established the following standard price and costs for a har

ID: 2538935 • Letter: B

Question

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

Assume that Benson actually produced and sold 33,000 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 $ 37.00 Materials cost 8.20 Labor cost 3.80 Overhead cost 6.00 Selling, general, and administrative costs 6.40 Planned fixed costs Manufacturing overhead $ 129,000 Selling, general, and administrative 52,000

Explanation / Answer

Answer

Budget

Actual

Variance - Favorable / (Unfavorable)

Sales revenue

1,221,000

1,188,000

(33,000)

Variable manufacturing costs

Materials

270,600

277,200

6,600

Labor

125,400

122,100

(3,300)

Overhead

198,000

199,650

1,650

Selling, general,and administrative costs

211,200

204,600

(6,600)

Contribution margin

415,800

384,450

(31,350)

Fixed costs

Manufacturing overhead

129,000

114,000

(15,000)

Selling, general, and administrative costs

52,000

58,000

6,000

Net income

234,800

212,450

(22,350)