QuestionProblem 1.Determining sales and variable cost volume variancesTodhunter Publications established the following sta

Problem 1.Determining sales and variable cost volume variances
Todhunter Publications established the following standard price and costs for hardcover picture book that the company produces.
Standard price and variable:
Sales price $36.00
Materials 9.00
Labor 4.50
Overhead 6.30
General, selling, and administrative 7.20
Planned fixed costs:
Manufacturing $135,000
General, selling, and administrative 54,000
Todhunter planned to make and sell 30,000 copies of the book.
Required
a. Prepare the pro forma income statement that would appear in the master budget.
b. Prepare flexible budget income statements, assuming volumes of 29,000 and 31,000 units
c. Determine the sales and variable cost volume variances, assuming volume is actually 31,000 units.
d. Indicate whether the variance are favorable (F) or unfavorable (U)
e. Comment on how Todhunter could use the variances to evaluate performance.

Problem2. Determining and interpreting flexible budget variances
Use the standard price and cost data supplied in Problem above. Assume that Todhunter actually produced and sold 31,000 books. The actual sales price and costs incurred follow.
Actual price and variable costs:
Sales price $35.00
Materials 9.20
Labor 4.40
Overhead 6.35
General, selling, and administrative 7.00
Planned fixed costs:
Manufacturing $120,000
General, selling, and administrative 60,000
Required
a. Determine the flexible budget variances.
b. Indicate whether each variance is favorable (F) or (U).
c. Identify the management position responsible for each variance. Explain what could have caused the variance

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