Please Help!! Use the information provided in Exercise 15-3. a.Determine the sal
ID: 2363176 • Letter: P
Question
Please Help!! Use the information provided in Exercise 15-3. a.Determine the sales and variable cost volume variances. b.Classify the variances as favorable (F) or unfavorable (U). c.Comment on the usefulness of the variances with respect to performance evaluation and identify the member of the management team most likely to be responsible for these variances. d.Determine the amount of fixed cost that will appear in the flexible budget. Information from 15-3 Sexton Manufacturing Company established the following standard price and cost data. Sales Price $8.00 per Unit Variable Manufacturing Cost $4.00 Per Unit Fixed Manufacturing Costs 3,000 total Fixed S&A; Costs 1,000 total Sexton planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 units.Explanation / Answer
The fixed costs remain the same at $15,000 The variable costs per unit are estimated to be ($27,500 / 22,000) = $1.25 per unit. So at a production level of 16,000 units, variable costs are expected to be (16,000 x $1.25) = $20,000 So total estimated costs are ($15,000 + $20,000) = $35,000 unfavorable varience Sales Volume Variance This is the difference between the actual number of units sold and the budgeted (planned) number sold, multiplied by the budgeted selling price per unit. so 1300-1100 = 200 x $7.50 = $1,500 The Variable Cost Volume Variance is the Change in Volume times Budgeted Rate. (Budgeted Volume – Actual Volume) X Budgeted VC per unit so 1300 - 1100 = 200 times $3 per unit = $600