Question

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

Sales price	$	8.70	per unit
Variable manufacturing cost	$	3.30	per unit
Fixed manufacturing cost	$	3,000	total
Fixed selling and administrative cost	$	900	total

Campbell planned to produce and sell 2,300 units. Actual production and sales amounted to 2,500 units.

Required

1. Determine the sales and variable cost volume variances.

2. Classify the variances as favorable (F) or unfavorable (U).

4. Determine the amount of fixed cost that will appear in the flexible budget.

5. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity.

• Req A and B
• Req D
• Req E

Determine the sales and variable cost volume variances and classify the variances as favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

		Volume Variances
a.	Sales	$1,740	F
b.	Variable manufacturing		U

Determine the amount of fixed cost that will appear in the flexible budget.

Flexible Budget
Fixed manufacturing cost
Fixed selling and administrative costs

Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity. (Round your answers to 2 decimal places.)

	Master Budget	Flexible Budget
Fixed cost per unit

Answer 1

Answer-

Answer A & B

Sales Volume Variance = (Actual units sold - Budgeted units sold ) * Budgeted sales priceper unit

= (2,500 - 2,300) * 8.70 per unit = $1,740 F

Variable costs volume Variance = (Actual units sold - Budgeted units sold ) * Budgeted Variable cost per unit

(2,500 - 2,300) * 3.30 per unit = $660 U

	Volume Variance
Sales	$1,740	F
Variable manufacturing	$660	U

Answer D

Note : Under flexible budget , fixed costs remains unchanged irrespective of actual level of activity

Flexible Budget
Fixed manufacturing cost	$3,000
Fixed selling and administrative costs	$900

Answer E

	Master Budget	Flexible Budget
Fixed cost per unit	Total Fixed cost / Budgeted units = ($3,000 + $900) / 2,300 units = $1.70	Total Fixed cost / Actual units = ($3,000 + $900) / 2,500 units = $1.56

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