Zachary Manufacturing Company established the following standard price and cost
ID: 2556669 • Letter: Z
Question
Zachary Manufacturing Company established the following standard price and cost data:**** Please explain in detail how you get all the answers***
Sales price
$
8.90
per unit
Variable manufacturing cost
$
3.70
per unit
Fixed manufacturing cost
$
2,100
total
Fixed selling and administrative cost
$
1,000
total
Zachary planned to produce and sell 3,000 units. Actual production and sales amounted to 3,300 units.
Assume that the actual sales price is $8.70 per unit and that the actual variable cost is $3.95 per unit. The actual fixed manufacturing cost is $1,900, and the actual selling and administrative costs are $1,030.
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
U
Variable manufacturing
U
Contribution margin
U
Fixed manufacturing
F
Fixed selling and administrative cost
U
Net income (loss)
U
Sales price
$
8.90
per unit
Variable manufacturing cost
$
3.70
per unit
Fixed manufacturing cost
$
2,100
total
Fixed selling and administrative cost
$
1,000
total
Explanation / Answer
Ans. Particulars Standard Actual Variance Sales 26700 28710 2010 F less: Variable cost 11100 13035 1935 U Contribution 15600 15675 75 F less: Fixed costs: Manufacturing 2100 1900 -200 F Selling & administrative 1000 1030 30 U Total fixed cost 3100 2930 -170 F Net Income 12500 12745 245 F Variance = Actual-Standard *Calculation: Standard Actual Sales (8.90*3000) (8.70*3300) Variable cost (3.70*3000) (3.95*3300) *If the sales and income increase it is favourable & the decrease of sales and income is unfavourable. *If the Costs are increases it is Unfavourable & the decrease of cost is favourable.
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