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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).)

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 And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter27: Lean Manufacturing And Activity Analysis
Section: Chapter Questions
Problem 18E: Cost of quality and value-added/non-value-added reports for a service company A. Using the...
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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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