Problem
Lloyd Publications established the following standard price and costs for a hardcover picture book that the company produces.
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Standard price and variable costs
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|
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Sales price
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36.40
|
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Materials cost
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8.60
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Labor cost
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3.60
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Overhead cost
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5.40
|
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Selling, general, and administrative costs
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6.80
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Planned fixed costs
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|
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Manufacturing overhead
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128,000
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Selling, general, and administrative
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44,000
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Lloyd planned to make and sell 22,000 copies of the book.
Required
Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 21,000 and 23,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 23,000 units. Indicate whether the variances are favorable (F) or unfavorable (U).