Question

Thornton 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		8.50
Labor cost		4.30
Overhead cost		5.50
Selling, general, and administrative costs		6.80
Planned fixed costs
Manufacturing overhead	$	135,000
Selling, general, and administrative		51,000

Thornton planned to make and sell 21,000 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 20,000 and 22,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 22,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

	Master Budget Flexible Budgets Volume Variances Number of units 21,000 20,000 22,000 Sales revenue Variable manufacturing costs Materials Labor Manufacturing overhead Variable selling, general, and administrative costs Contribution margin Fixed costs Manufacturing overhead Fixed selling, general, and administrative costs Net income

Please also explain calculations!

Answer 1