Miller Manufacturing Company established the following standard price and cost d

Question

Miller Manufacturing Company established the following standard price and cost data:

Miller planned to produce and sell 2,300 units. Actual production and sales amounted to 2,500 units.

Required

1. Determine the sales and variable cost volume variances.

2. Determine the amount of fixed cost that will appear in the flexible budget.

3. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity.

Sales price $ 8.10 per unit Variable manufacturing cost $ 3.70 per unit Fixed manufacturing cost $ 2,000 total Fixed selling and administrative cost $ 500 total

Explanation / Answer

1. Determine the sales and variable cost volume variances.

Sales volume variance = (2300-2500)*8.10 = 1620 F

Variable cost volume variance = (2300-2500)*3.70 = 740 U

2) Fixed cost in flexible budget = 2000+500 = 2500

3) Fixed cost per unit planned activity = 2500/2300 = 1.09 per unit

Fixed cost per unit actual activity = 2500/2500 = 1 per unit

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