Perez Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Planned fixed costs Manufacturing overhead Selling, general, and administrative Assume that Perez actually produced and sold 38.000 books. The actual sales price and costs incurred follow: Actual price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Actual fixed costs Manufacturing overhead Selling, general, and administrative Sales revenue Variable manufacturing costs Materials Labor Overhead Selling, general and administrative costs Contribution margin $36.00 8.50 4.20 6.10 6.30 Fixed costs Manufacturing overhead Selling, general, and administrative costs Net income Flexible Budget Variances $ 126,000 45,000 Required a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable (F) or unfavorable (U). Note: Select "None" If there is no effect (I.e., zero variance). $ 35.00 8.70 4.10 6.15 6.10 $ 111,000 51,000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Perez Publications established the following standard price and costs for a hardcover picture book that the company produces.
Standard price and variable costs
Sales price
Materials cost
Labor cost
Overhead cost
Selling, general, and administrative costs
Planned fixed costs
Manufacturing overhead
$ 126,000
45,000
Selling, general, and administrative
Assume that Perez actually produced and sold 38,000 books. The actual sales price and costs incurred follow:
Actual price and variable costs
Sales price
Materials cost
Labor cost
Overhead cost
Selling, general, and administrative costs
Actual fixed costs
Manufacturing overhead
Selling, general, and administrative
Sales revenue
Variable manufacturing costs
Materials
Labor
Overhead
Selling, general, and administrative costs
Contribution margin
Required
a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable (F) or unfavorable
(U).
Note: Select "None" If there is no effect (l.e., zero varlance).
Fixed costs
$36.00
8.50
4.20
6.10
6.30
Manufacturing overhead
Selling, general, and administrative costs
Net income
Flexible Budget
Variances
$35.00
8.70
4.10
6.15
6.10
$ 111,000
51,000
Transcribed Image Text:Perez Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Planned fixed costs Manufacturing overhead $ 126,000 45,000 Selling, general, and administrative Assume that Perez actually produced and sold 38,000 books. The actual sales price and costs incurred follow: Actual price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Actual fixed costs Manufacturing overhead Selling, general, and administrative Sales revenue Variable manufacturing costs Materials Labor Overhead Selling, general, and administrative costs Contribution margin Required a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable (F) or unfavorable (U). Note: Select "None" If there is no effect (l.e., zero varlance). Fixed costs $36.00 8.50 4.20 6.10 6.30 Manufacturing overhead Selling, general, and administrative costs Net income Flexible Budget Variances $35.00 8.70 4.10 6.15 6.10 $ 111,000 51,000
Expert Solution
Step 1: Introduction

In some business, it is extremely difficult to estimate future level of activity with any accuracy.The main requirement of a Flexible budget is that expenses should be analysed into three categories i.e Fixed Expense, Variable Expenses and Semi Variable Expenses.

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