Question

A company has prepared a master budget for the month of February when they expected to...

  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:
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