Tolbert Publications established the following standard price and costs for a hardcover picture book that the company produces.

Tolbert 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 production volumes of 29,000 and 31,000 units.

c. Determine the sales volume variances, assuming production and sales volume are actually 31,000 units.

d. Indicate whether the variances are favorable (F) or unfavorable (U).

e. Comment on how Tolbert could use the variances to evaluate performance.

Transcribed Image Text:

Standard price and variable costs Sales price Materials cost $36.00 9.00 Labor cost 4.50 Overhead cost 6.30 General, selling, and administrative costs. 7.20 Planned fixed costs Manufacturing $135,000 General, selling, and administrative 54,000