Benson 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 8.80 Labor cost 4.10 Overhead cost 6.10 Selling, general, and administrative costs 6.80 Planned fixed costs Manufacturing overhead$132,000 Selling, general, and administrative 45,000 Assume that Benson actually produced and sold 32,000 books. The actual sales price and costs incurred follow: Actual price and variable costs Sales price$35.30 Materials cost 9.00 Labor cost 4.00 Overhead cost 6.15 Selling, general, and administrative costs 6.60 Actual fixed costs Manufacturing overhead$117,000 Selling, general, and administrative 51,000 Requireda. & b. Determine the flexible budget variances and also Indicate whether each variance is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) Answer is complete but not entirely correct.Flexible BudgetVariancesOXUSales revenueVariable manufacturing costsMaterialsLaborOverheadVariable selling, general, and administrative costsContribution marginFixed costsManufacturing overheadSelling, general, and administrative costsNet income$(6,400)3,200(1,000)(33,050)15,000(6,000)$ (16,950)UCTC6,400 FUXFFככU33333

Introduction: Flexible budget variance is the difference between actual results and flexible budget.…

Answered: Benson Publications established the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Benson 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		8.80
Labor cost		4.10
Overhead cost		6.10
Selling, general, and administrative costs		6.80
Planned fixed costs
Manufacturing overhead	$	132,000
Selling, general, and administrative		45,000

Assume that Benson actually produced and sold 32,000 books. The actual sales price and costs incurred follow:


Actual price and variable costs
Sales price	$	35.30
Materials cost		9.00
Labor cost		4.00
Overhead cost		6.15
Selling, general, and administrative costs		6.60
Actual fixed costs
Manufacturing overhead	$	117,000
Selling, general, and administrative		51,000

Required

a. & b. Determine the flexible budget variances and also Indicate whether each variance is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

Answer is complete but not entirely correct.
Flexible Budget
Variances
OXU
Sales revenue
Variable manufacturing costs
Materials
Labor
Overhead
Variable selling, general, and administrative costs
Contribution margin
Fixed costs
Manufacturing overhead
Selling, general, and administrative costs
Net income
$
(6,400)
3,200
(1,000)
(33,050)
15,000
(6,000)
$ (16,950)
U
CTC
6,400 F
U
X
F
F
ככ
U
333
33

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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