Question

Zachary Manufacturing Company established the following standard price and cost data: 

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

Answer 1

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.