Vernon Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price $ 36.70 Materials cost 8.40 Labor cost 3.60 Overhead cost 6.00 Selling, general, and administrative costs 6.40 Planned fixed costs Manufacturing overhead $ 132,000 Selling, general, and administrative 53,000 Assume that Vernon actually produced and sold 36,000 books. The actual sales price and costs incurred follow: Actual price and variable costs Sales price $ 35.70 Materials cost 8.60 Labor cost 3.50 Overhead cost 6.05 Selling, general, and administrative costs 6.20 Actual fixed costs Manufacturing overhead $ 117,000 Selling, general, and administrative 59,000 Required a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable (F) or unfavorable (U).

Check the explanation

Explanation:

                                          Walton Publications

                                    Flexible Budget variance

                               Flexible Budget  Actual results  Variances

Units                                30000             30000  

Sales                               $11,04,000    $10,74,000     $30,000  U

Variable manufacturing costs:    

Materials                        $2,49,000     $2,55,000       $6,000  U

Labor                              $1,14,000       $1,11,000          $3,000  F

Overhead                       $1,83,000      $1,84,500        $1,500  U

Selling, general and

administrative costs       $2,16,000     $2,10,000        $6,000  F

Contribution Margin       $3,42,000    $3,13,500        $28,500  U

Fixed costs:    

Manufacturing Overhead $1,33,000   $1,18,000        $15,000  F

Selling, general and

administrative costs          $52,000      $58,000        $6,000  U

Net Income                        $1,57,000    $1,37,500      $19,500  U

Kindly check the attached image for the spreadsheet format

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