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.

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

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).)

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

Solution

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