Problem -
Sales Price $7.50 per unit
Variable Manufacturing costs 3.00 per Unit
Fixed Manufacturing costs 3,000 total
Fixed selling and administrative costs 1,000 total
Marlow planned to produce and sell 1,000 units. Actual production and sales amounted to 1,300.
Use the standard price and cost data provided above. Assume that the actual sales price is $7.20 per unit and that the actual variable cost is $3.30 per unit. The actual fixed manufacturing cost is $2,850, and the actual selling and administrative expenses are $1,025.
a. Determine the flexible budget variances.
b. Classify the variances as (F)avorable or (U)nfavorable.
c. Provide another name for the fixed cost flexible budget variances.
d. Comment on the usefulness of the variances with respect to performance evaluation and identify the members of the management team who is (are) most likely to be responsible for these variances.