Question

1. A company has prepared a master budget for the month of February when they expected to sell 4,000 units. They actually sold 3,750 units. Calculate the flexible budget and the spending and volume variances for February. Identify if the variances are favorable or unfavorable.

	Actual Costs 3,750 Units	Spending Variances	Flexible Budget _______Units	Volume Variances	Master Budget 4,000 Units
Manufacturing Costs:
Direct Materials	$14,500				$16,000
Direct Labor	38,500				40,000
Variable Manufacturing Overhead	12,000				14,000
Fixed Manufacturing Overhead	20,000				21,000
Total Manufacturing Cost	$85,000				$91,000

Per Unit Calculations:

Direct Materials:
Direct Labor:
Variable Manufacturing Overhead:

Answer 1

Answer is given below with working