Acc 202 15-18

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P15-18
Todhunter Publications established the following standard price and costs for a hardcover picture book that the company produces.

a)
Master Budget
Number of units 30,000
Sales prices 36
Sales revenue 1,080,000

Variable manufacturing costs
Materials 9.00 (270,000)
Labor 4.50 (135,000)
Overhead 6.30 (189,000)
Variable G,S,&A 7.20 (216,000)
Contribution margin 270,000
Fixed costs
Manufacturing (135,000)
General, selling & adm. (54,000)
Net income 81,000

b)
Flexible Budgets
Number of units 29,000 31,000
Sales prices 36
Sales revenue 1,044,000 1,116,000

Variable manufacturing costs
Materials 9.00 (261,000) (279,000)
Labor 4.50 (130,500) (139,500)
Overhead 6.30 (182,700) (195,300)
Variable G,S,&A 7.20 (208,800) (223,200)
Contribution margin 261,000 279,000
Fixed costs
Manufacturing (135,000) (135,000)
General, selling & adm. (54,000) (54,000)
Net income 72,000 90,000

c) & d)
Number of units 30,000 31,000
Master Flexible Volume
Sales Price Budget Budget Variances
Sales revenue 36.00 1,080,000 1,116,000 36,000 F

Variable manufacturing costs
Materials 9.00 (270,000) (279,000) 9,000 U
Labor 4.50 (135,000) (139,500) 4,500 U
Overhead 6.30 (189,000) (195,300) 6,000 U
Variable G,S,&A 7.20 (216,000) (223,200) 7,200 U
Contribution margin 270,000 279,000 9,000 F
Fixed costs
Manufacturing (135,000) (135,000)0
G,S,&A (54,000) (54,000)0
Net income 81,000 90,000 9,000 F

e)
The volume variances can be used to...
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