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Narcisco Publications established the following standard price and costs for a hardcover picture book that the company produces: Standard price and variable costs Sales price $ 90.00 Materials cost 18.00 Labor cost 9.00 Overhead cost 12.60 Selling, general, and administrative costs 14.40 Planned fixed costs Manufacturing overhead $ 270,000 Selling, general, and administrative 108,000 Narcisco 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 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

Respuesta :

Answer:

Pro Forma Income Statement                                     30,000 units

Sales($90 * 30,000)                                                     $2,700,000

Minus Variable Costs                                                   $1,620,000

  - Direct Material ($18 *30,000)=540,000

 - Direct Labor ($9*30,000) =270,000

 - Overhead cost(12.60*30,000)=378,000

 - Selling and admin (14.40*30,000)=432,000

Contribution                                                                  $1,080,000

minus Fixed Costs                                                        $378,000

- Manufacturing costs = 270,000

 - Selling and admin cost = 108,000

Net Income                                                                   $702,000

FLEXIBLE BUDGET INCOME STATEMENT

                                                        29,000 UNITS          31,000 UNITS

Sales                                             $2,610,000                 $2,790,000

Minus Variable costs                   $1,566,000                 $1,674,000

Direct Material                             $522,000                    $558,000          

Direct labor                                  $261,000                     $279,000

Overhead cost                             $365,400                    $390,600

Selling and Admin cost               $417,600                     $446,400

Contribution                                 $1,044,000                 $1,116,000

Minus Fixed Cost                         $378,000                      $378,000

 - Manufacturing cost                  $270,000                      $270,000

 - Selling and Admin cost            $108,000                      $108,000

Net Income                                   $666,000                     $738,000

Details                                 30,000 Units              31,000 Units  Variance

Sales                                   $2,700,000                $2,790,000   $90,000 F

Direct Material                    $540,000                  $558,000      $18,000 U

Direct Labor                        $270,000                  $279,000      $9,000 U

Overhead cost                   $378,000                   $390,600      $12,000 U

Selling and Admin             $432,000                   $446,400      $14,400 U

Total                                                                                              $36,600 F

Explanation:

anthougo

The requirements for the Proforma Income Statements and Sales and Variable Cost Volume Variances are indicated as follows:

Narcisco Publications

Proforma Income Statements

                                                  29,000 units    30,000 units     31,000 units

Sales Revenue                             $2,610,000      $2,700,000      $2,790,000

Variable costs                               1,566,000          1,620,000          1,674,000

Contribution margin                 $1,044,000      $1,080,000        $1,116,000

Fixed Costs:

Manufacturing overhead            $270,000           $270,000          $270,000

Selling, general, & administrative 108,000              108,000             108,000

Total Fixed costs                         $378,000           $378,000          $378,000

Operating Income                     $666,000          $702,000         $738,000

Sales and Variable Cost Volume Variances

                                                        Planned            Actual          Variance

                                                        Budget            Budget

                                                   30,000 units     31,000 units    1,000 units F

Sales Revenue                            $2,700,000     $2,790,000     $90,000  F

Variable costs                                1,620,000        1,674,000        54,000  U

Data and Calculations:

Standard price

Sales price             $ 90.00

Materials cost                  18.00

Labor cost                        9.00

Overhead cost               12.60

SGA costs                      14.40

Total variable costs   $54.00

Contribution margin  $36.00

Planned fixed costs

Manufacturing overhead               $ 270,000

Selling, general, and administrative 108,000

Narcisco planned production and sales = 30,000 units

                                                        Planned            Actual          Variance

                                                        Budget            Budget

                                                   30,000 units     31,000 units      1,000 units F

Sales Revenue                            $2,700,000      $2,790,000     $90,000  F

Variable costs                                1,620,000         1,674,000        54,000  U

Contribution margin                    $1,080,000        $1,116,000      $36,000  F

Fixed Costs:

Manufacturing overhead              $270,000        $270,000       $0

Selling, general, & administrative   108,000           108,000       $0

Total Fixed costs                          $378,000        $378,000        $0

Operating Income                        $702,000        $738,000       $36,000 F

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