Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 29,000 and 31,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 31,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 29,000 and 31,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 31,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
100%
Stuart 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 | 8.90 | ||
| Labor cost | 4.20 | ||
| 5.90 | |||
| Selling, general, and administrative costs | 6.30 | ||
| Planned fixed costs | |||
| Manufacturing overhead | $ | 128,000 | |
| Selling, general, and administrative | 49,000 | ||
Stuart planned to make and sell 30,000 copies of the book.
Required:
a. - d. Prepare the pro forma income statement that would appear in the
Transcribed Image Text: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 29,000 and 31,000 units. Determine the sales and variable cost volume variances, assuming volume
is actually 31,000 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
Master Budget
30,000
$
0 $
Flexible Budgets
29,000
0 $
31,000
0
0
Volume Variances
F
U
U
U
U
F
None
None
F
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