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Karo-lina-s [1.5K]
3 years ago
14

Exercise 8-5A Determining flexible budget variances LO 8-4 Benson Manufacturing Company established the following standard price

and cost data: Sales price $ 8.10 per unit Variable manufacturing cost $ 3.90 per unit Fixed manufacturing cost $ 2,100 total Fixed selling and administrative cost $ 500 total Benson planned to produce and sell 2,400 units. Actual production and sales amounted to 2,700 units. Assume that the actual sales price is $7.80 per unit and that the actual variable cost is $4.25 per unit. The actual fixed manufacturing cost is $1,300, and the actual selling and administrative costs are $530. Required a.&b. Determine the flexible budget variances and classify the effect of each variance by selecting favorable (F) or unfavorable (U).
Business
1 answer:
leva [86]3 years ago
8 0

Answer:

A. $720 Unfavorable

B. $840 Unfavorable

C. $1,560 Unfavorable

D. $800 Favorable

E. $30 Unfavorable

F. $790 Unfavorable

Explanation:

The computation of given question is shown below:-

A. Sales = (Budget quantity - Actual quantity) × Budgeted sale price

= ($8.10 - $7.80) × 2,400

= $0.3 × 2,400

= $720 Unfavorable

B. Variable manufacturing = (Actual variable cost - Budgeted variable manufacturing cost) × Budgeted sale price

= ($4.25 - $3.90) × 2,400

= $0.35 × 2,400

= $840 Unfavorable

C. Contribution margin = ((Budgeted sales price - Budgeted variable manufacturing cost) - (Actual sale price - Actual variable cost)) × Budgeted sale price

= (($8.10 - $3.90) - ($7.80 - $4.25)) × 2,400

= $0.65 × 2,400

= $1,560 Unfavorable

D. Fixed manufacturing = Actual fixed manufacturing cost - Budgeted  Fixed manufacturing cost

= $1,300 - $2,100

= $800 Favorable

E. Fixed selling and admin cost = Actual selling and administrative costs - Budgeted fixed selling and administrative cost

= $530 - $500

= $30 Unfavorable

F. Net income (loss) = Contribution margin - Fixed manufacturing + Fixed selling and admin cost

= $1,560 - $800 + $30

= $790 Unfavorable

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