Bent Rods, Inc., repairs engine rods of various types for diesel motors. The company is one of the few in its industry to do these repairs, so it has a fairly stable customer flow. That said, the number of bent rods the company has to repair can vary greatly from one year to the next. Since a bent rod can wreck an engine, there is little downward pressure on price. Tom Peters, owner of Bent Rods, has decided it would be a good idea to examine his company’s performance for the last year, taking into account actual vs. planned volumes of sales. His accountant provides Tom with the following information.

REQUIRED:

a. Develop a sales volume variance for the company.

b. Develop a sales price variance for the company.

c. Develop a variable manufacturing cost variance.

d. Develop a fixed manufacturing cost variance.

e. Develop a variable SG&A cost variance.

f. Develop a fixed SG&A cost variance.

g. Where should Tom put his time? Why?

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Bent Rods, Inc. Budgeted Actual Soles volume 1,125,000 1,120,000 Selling price $75.00 $76.50 Manufacturing cost-variable $26.25 $27.54 Manufacturing cost-fixed $14,343,750 $13,708,800