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 $ 36.30   Materials cost   8.30   Labor cost   4.00   Overhead cost   5.40   Selling, general, and administrative costs   6.80   Planned fixed costs       Manufacturing overhead $ 130,000   Selling, general, and administrative   46,000       Vernon planned to make and sell 39,000 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 38,000 and 40,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 40,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 $ 36.30  
Materials cost   8.30  
Labor cost   4.00  
Overhead cost   5.40  
Selling, general, and administrative costs   6.80  
Planned fixed costs      
Manufacturing overhead $ 130,000  
Selling, general, and administrative   46,000  
 

 

Vernon planned to make and sell 39,000 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 38,000 and 40,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 40,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

 

Number of units
Sales revenue
Variable manufacturing costs
Materials
Labor
Manufacturing overhead
Variable selling general, and administrative costs
Contribution margin
Fixed costs
Manufacturing overhead
Fixed selling, general, and administrative costs
Net income
Answer is not complete.
Master
Budget
39,000
$ 1,415,700
323,700
156,000
210,600
265,200
460,200
130,000
46,000
$ 284,200
Flexible Budgets
38,000
S
1.379.400
315,400
152,000
205,200
258,400
448,400
130,000
46,000
$ 272,400
S
40,000
1,452,000
332,000
160,000
216,000
272,000
472,000
130,000
46,000
$ 296,000
Volume Variances
16,600 X U
8,000 X U
10,800 X U
13,600 U
49,000 X F
$ 23,600
None
None
F
>>
Transcribed Image Text:Number of units Sales revenue Variable manufacturing costs Materials Labor Manufacturing overhead Variable selling general, and administrative costs Contribution margin Fixed costs Manufacturing overhead Fixed selling, general, and administrative costs Net income Answer is not complete. Master Budget 39,000 $ 1,415,700 323,700 156,000 210,600 265,200 460,200 130,000 46,000 $ 284,200 Flexible Budgets 38,000 S 1.379.400 315,400 152,000 205,200 258,400 448,400 130,000 46,000 $ 272,400 S 40,000 1,452,000 332,000 160,000 216,000 272,000 472,000 130,000 46,000 $ 296,000 Volume Variances 16,600 X U 8,000 X U 10,800 X U 13,600 U 49,000 X F $ 23,600 None None F >>
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