Thornton Publications established the following standard price and costs for a h

Question

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

Assume that Thornton 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 $ 36.90 Materials cost 8.80 Labor cost 4.50 Overhead cost 5.50 Selling, general, and administrative costs 6.40 Planned fixed costs Manufacturing overhead $ 126,000 Selling, general, and administrative 47,000

Explanation / Answer

flexible budget variances is as prepared below:

Working:

Thornton Publications Flexible Budget Performance Report For the month ended XXX Particulars Actual Results Revenue and spending variances Flexible Budget Books 33,000 33,000 Sales Price $1,184,700 -33,000 U 1,217,700 Less: COGS Material 297,000 6,600 U 290,400 Labour 145,200 -3,300 F 148,500 Overhead 183,150 1,650 U 181,500 Selling general and administrative costs 204,600 -6,600 F 211,200 Contribution Margin 354,750 -31,350 U 386,100 Less:   Fixed manufacturing overhead $111,000 -15,000 F 126,000 Fixed selling, general and administrative $53,000 6,000 U 47,000 Net Operating Income 190,750 -22,350 U 213,100

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