Managerial Accounting P15-18 Determining sales and variable cost volume variances: Todhunter Publications

P15-18 Determining sales and variable cost volume variances

Todhunter Publications established the following standard price and costs for hardcover picture book that the company produces.

Standard price and variable:

Sales price                                        $36.00

Materials                                             9.00

Labor                                                   4.50

Overhead                                             6.30

General, selling, and administrative      7.20

Planned fixed costs:

Manufacturing                               $135,000

General, selling, and administrative     54,000

Todhunter planned to make and sell 30,000 copies of the book.

Required

a. Prepare the pro forma income statement that would appear in the master budget.

b. Prepare flexible budget income statements, assuming volumes of 29,000 and 31,000 units

c. Determine the sales and variable cost volume variances, assuming volume is actually 31,000      units.

d. Indicate whether the variance are favorable (F) or unfavorable (U)

e. Comment on how Todhunter could use the variances to evaluate performance.

Tutorial:  P15-18 Todhunter Publications

Managerial Accounting: P15-19 (Determining and interpreting flexible budget variances) Todhunter Publications

P15-19 Determining and interpreting flexible budget variances

Use the standard price and cost data supplied in Problem above.  Assume that Todhunter actually produced and sold 31,000 books. The actual sales price and costs incurred follow.

Actual price and variable costs:

Sales price                                         $35.00

Materials                                               9.20

Labor                                                    4.40

Overhead                                              6.35

General, selling, and administrative        7.00

Planned fixed costs:

Manufacturing                                 $120,000

General, selling, and administrative      60,000

Required

a. Determine the flexible budget variances.

b. Indicate whether each variance is favorable (F) or (U).

c. Identify the management position responsible for each variance. Explain what could have caused the variance

Tutorial:  P15-19 Todhunter Publications