Question

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

Standard price and variable costs Sales price $ 36.40 Materials cost 8.30 Labor cost 4.10 Overhead cost 5.60 Selling, general, and administrative costs 7.20 Planned fixed costs Manufacturing overhead $ 127,000 Selling, general, and administrative 52,000 Rundle planned to make and sell 31,000 copies of the book.

Required: a. - d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 30,000 and 32,000 units.

Determine the sales and variable cost volume variances, assuming volume is actually 32,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

	Master Budget Flexible Budgets Volume Variances Number of units 31,000 30,000 32,000 Variable manufacturing costs 0 0 0 Fixed costs $0 $0 $0

2.Adams Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price $ 36.10 Materials cost 8.10 Labor cost 3.60 Overhead cost 6.00 Selling, general, and administrative costs 7.00 Planned fixed costs Manufacturing overhead $ 128,000 Selling, general, and administrative 49,000

Assume that Adams actually produced and sold 21,000 books. The actual sales price and costs incurred follow: Actual price and variable costs Sales price $ 35.10 Materials cost 8.30 Labor cost 3.50 Overhead cost 6.05 Selling, general, and administrative costs 6.80 Actual fixed costs Manufacturing overhead $ 113,000 Selling, general, and administrative 55,000

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).)

	Flexible Budget Variances Sales revenue Variable manufacturing costs Materials Labor Overhead Selling, general,and administrative costs Contribution margin Fixed costs Manufacturing overhead Selling, general, and administrative costs Net income

Answer 1