Question

1. Munoz Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price $ 36.30 Materials cost 8.20 Labor cost 3.60 Overhead cost 5.80 Selling, general, and administrative costs 6.80 Planned fixed costs Manufacturing overhead $ 134,000 Selling, general, and administrative 51,000 Munoz planned to make and sell 23,000 copies of the book. Required: a. - d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 22,000 and 24,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 24,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

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

Standard price and variable costs
Sales price	$	36.50
Materials cost		8.80
Labor cost		3.80
Overhead cost		6.20
Selling, general, and administrative costs		7.10
Planned fixed costs
Manufacturing overhead	$	126,000
Selling, general, and administrative		51,000

Assume that Perez actually produced and sold 29,000 books. The actual sales price and costs incurred follow:

Actual price and variable costs
Sales price	$	35.50
Materials cost		9.00
Labor cost		3.70
Overhead cost		6.25
Selling, general, and administrative costs		6.90
Actual fixed costs
Manufacturing overhead	$	111,000
Selling, general, and administrative		57,000

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).)

Answer 1

Ans-1- Income Statement

		Master Budget	Flexible Budget		Volume Variances
a-	Number of units	23,000	22,000	24,000	(Actual-Budgeted)
b-	Selling Price	$36.30	$36.30	$36.30
c-	Sales (a*b)	$834,900	$798,600	$871,200	$36,300	(Favourable)
	Variable manufacturing cost
	Material Cost ($8.20 per unit)	$188,600	$180,400	$196,800	$8,200	(Favourable)
	Labor Cost ($3.60 per unit)	$82,800	$79,200	$86,400	$3,600	(Favourable)
	Overhead Cost ($5.80 per unit)	$133,400	$127,600	$139,200	$5,800	(Favourable)
	Variable Admin and Selling Cost ($6.80 per unit)	$156,400	$149,600	$163,200	$6,800	(Favourable)
d-	Total Variable Cost	$561,200	$536,800	$585,600	$24,400	(Favourable)
e-	Contribution Margin (c-d)	$273,700	$261,800	$285,600
	Fixed Cost
	Manufacturing Cost	$134,000	$134,000	$134,000
	Selling,General and Administrative Cost	$51,000	$51,000	$51,000
f-	Total Fixed Cost	$185,000	$185,000	$185,000
g-	Net Income (e-f)	$88,700	$76,800	$100,600

Ans-2- The Flexible budget variances:-

Particulars	Standard	Actual	Variances
Sales	29,000*$36.50 =$1,058,500	29,000*$35.50 =$1,029,500	$29,000 (U)
Less: Variable Cost
-Material Cost	29,000*$8.80 =$255,200	29,000*$9.00 =$261,000	$5,800 (U)
-Labor	29,000*$3.80 =$110,200	29,000*$3.70 =$107,300	$2,900(F)
-Overhead	29,000*$6.20 =$179,800	29,000*$6.25 =$181,250	$1,450 (U)
-Selling,General and Adminstrative Cost	29,000*$7.10 =$205,900	29,000*$6.90 =$200,100	$5,800 (F)
Total Variable Cost	$751,100	$749,650	$1,450 (F)
Contribution Margin	$307,400	$279,850	$27,550(U)
Less; Fixed Cost
-Manufacturing overhead	$126,000	$111,000	$15,000(F)
-Selling,General and Administrative	$51,000	$57,000	$6,000 (U)
Total Fixed Cost	$177,000	$168,000	$9,000(F)
Net Income (Contribution-Total Fixed Cost)	$130,400	$111,850	$18,550(U)

Please Please give thumbsup if u like my answer....Thanks!!!