Question

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

Standard price and variable costs
Sales price	$	37.00
Materials cost		8.20
Labor cost		3.80
Overhead cost		6.00
Selling, general, and administrative costs		6.40
Planned fixed costs
Manufacturing overhead	$	129,000
Selling, general, and administrative		52,000

Assume that Benson actually produced and sold 33,000 books. The actual sales price and costs incurred follow:

Actual price and variable costs
Sales price	$	36.00
Materials cost		8.40
Labor cost		3.70
Overhead cost		6.05
Selling, general, and administrative costs		6.20
Actual fixed costs
Manufacturing overhead	$	114,000
Selling, general, and administrative		58,000

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).)

	Flexible Budget Variances Sales revenue Variable manufacturing costs Materials Labor Overhead Selling, general,and administrative costs Contribution margin Fixed costs Manufacturing overhead Selling, general, and administrative costs Net income

Answer 1

Answer

	Budget	Actual	Variance - Favorable / (Unfavorable)
Sales revenue	1,221,000	1,188,000	(33,000)
Variable manufacturing costs
Materials	270,600	277,200	6,600
Labor	125,400	122,100	(3,300)
Overhead	198,000	199,650	1,650
Selling, general,and administrative costs	211,200	204,600	(6,600)
Contribution margin	415,800	384,450	(31,350)
Fixed costs
Manufacturing overhead	129,000	114,000	(15,000)
Selling, general, and administrative costs	52,000	58,000	6,000
Net income	234,800	212,450	(22,350)