Thornton Publications established the following standard pri

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 Materials cost Labor cost Overhead cost Selling, general, and administrative costs $ 36.90 8.20 3.80 5.40 6.30 Planned fixed costs Manufacturing overhead Selling, general, and administrative $131,000 44,000 Assume that Thornton actually produced and sold 28,000 books. The actual sales price and costs incurred follow: Actual price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs $ 35.90 8.40 3.70 5.45 6.10 Actual fixed costs Manufacturing overhead Selling, general, and administrative $116,000 50,000 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.)

Solution

Flexible Budget Standard Actual Variance Sales revenue 1033200 1005200 28000 Unfavorable variable Manufacturing cost Material 229600 235200 5600 Unfavorabl Labor 106400 103600 2800 Favorable Overheads 151200 152600 1400 Unfavorable Selling General and Admin Cost 176400 170800 5600 Favorable Contribution Margin 369600 343000 26600 Unfavorable Fixed cost Manufacturing Oh 131000 116000 15000 Favorable Selling General and Admin Cost 44000 50000 6000 Unfavorable Net income 194600 177000 17600 Unfavorable