Benson Manufacturing Company established the following standard price and cost data: Sales price $ 8.10 per unit Variable manufacturing cost $ 3.90 per unit Fixed manufacturing cost $ 2,100 total Fixed selling and administrative cost $ 500 total Benson planned to produce and sell 2,400 units. Actual production and sales amounted to 2,700 units. Assume that the actual sales price is $7.80 per unit and that the actual variable cost is $4.25 per unit. The actual fixed manufacturing cost is $1,300, and the actual selling and administrative costs are $530. Required a.&b. Determine the flexible budget variances and classify the effect of each variance by selecting favorable (F) or unfavorable (U). (

The flexible budget variances are attached.

Overall, the variance was favorable.  The actual results in net income produced a favorable variance of $275.

Explanation:

A budget variance is the difference between the actual amount and the budgeted.

It is favorable when the actual income is greater than the budgeted income or when the actual expense is less than the budgeted expense.  Income becomes favorable if more actual income had been generated than actually projected.  And if actual expense is more than budgeted, then the expense line item records unfavorable variance.

Variance analysis is always employed to gauge performance.  After analysis, the variances are investigated for course correction, as the case may be.  Favorable outcomes are encouraged while unfavorable outcomes are discouraged.

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