Question

Thornton Publications established the following standard price and costs for a hardcover picture book that the...

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

Standard price and variable costs
Sales price $ 36.60
Materials cost 8.90
Labor cost 3.90
Overhead cost 5.40
Selling, general, and administrative costs 7.10
Planned fixed costs
Manufacturing overhead $ 131,000
Selling, general, and administrative 51,000

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

Actual price and variable costs
Sales price $ 35.60
Materials cost 9.10
Labor cost 3.80
Overhead cost 5.45
Selling, general, and administrative costs 6.90
Actual fixed costs
Manufacturing overhead $ 116,000
Selling, general, and administrative 57,000

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).)

Homework Answers

Answer #1
Actual Flexible budget variance Flexible budget
Production 33000 33000
Sales revenue 1174800 33000 U 1207800
Variable expense
Material 300300 6600 U 293700
Labor 125400 3300 F 128700
Overheads 179850 1650 U 178200
Selling , general and admin 227700 6600 F 234300
Contribution margin   341550 31350 U 372900
Fixed expense
Manufacturing overheads 116000 15000 F 131000
Selling , general and admin 57000 6000 U 51000
Net operating income 168550 22350 U 190900
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