Solomon Manufacturing Company established the following standard price and cost

Question

Solomon Manufacturing Company established the following standard price and cost data: Sales price $ 8.80 per unit Variable manufacturing cost $ 3.70 per unit Fixed manufacturing cost $ 2,000 total Fixed selling and administrative cost $ 600 total Solomon planned to produce and sell 2,400 units. Actual production and sales amounted to 2,600 units. Assume that the actual sales price is $8.50 per unit and that the actual variable cost is $4.05 per unit. The actual fixed manufacturing cost is $1,300, and the actual selling and administrative costs are $635. 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).)

Explanation / Answer

Budgeted Actual Sales Price 8.80 8.50 VC PU 3.70 4.05 Fixed Manufacturing OH 2000 1300 Fixed S&A OH 600 635 Planned Productn & Sales 2400 2600 Flexible Budget Flexible Budget Variance Report Units 2400 2600 Budgeted Actual Variance F/A Sales 21120 22880 Sales 22880 22100 -780 A Variable Cost 8880 9620 Variable Cost 9620 10530 -910 A Fixed Manufacturing OH 2000 2000 Fixed Manufacturing OH 2000 1300 700 F Fixed S&A OH 600 600 Fixed S&A OH 600 635 -35 A Total Cost 11480 12220 Total Cost 12220 12465 -245 A Net Income 9640 10660 Net Income 10660 9635 -1025 A

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