1. The master budget at Western Company last period called for sales of 225,000 units at $8.90 each. The costs were estimated to be $3.00 variable per unit and $220,000 fixed. During the period, actual production and actual sales were 230,000 units. The selling price was $9.00 per unit. Variable costs were $3.75 per unit. Actual fixed costs were $220,000.

Required:

Prepare a flexible budget for Western.

WESTERN COMPANY

Flexible Budget

Fixed costs, Sales revenue or Variable costs?	?
Fixed costs, Sales revenue or Variable costs?	?
Contribution margin or Contribution loss?	?
Fixed costs, Sales revenue or Variable costs?	?
Operating profit or Operating loss?	?

2. The master budget at Western Company last period called for sales of 225,600 units at $9.6 each. The costs were estimated to be $3.81 variable per unit and $225,600 fixed. During the period, actual production and actual sales were 230,600 units. The selling price was $9.70 per unit. Variable costs were $5.10 per unit. Actual fixed costs were $225,600.

Required:

Prepare a sales activity variance analysis. (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

WESTERN COMPANY

Sales Activity Variance

	Flexible Budget	Sales Activity Variance		Master Budget
Sales revenue			F or U
Less:
Variable costs			F or U
Contribution margin			F or U
Less:
Fixed costs Operating profits			F or U

3. The standard direct labor cost per unit for a company was $33 (= $22 per hour 1.5 hours per unit). During the period, actual direct labor costs amounted to $222,500, 10,000 labor-hours were worked, and 6,000 units were produced.

Required:

Compute the direct labor price and efficiency variances for the period. (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Price variance	?	F or U
Efficiency variance	?	F or U

4. Information on Carney Company's fixed overhead costs follows:

Overhead applied	$	362,600
Actual overhead		389,400
Budgeted overhead		375,500

Required:

What are the fixed overhead price and production volume variances? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Fixed overhead price variance	?	F or U
Fixed overhead production volume variance	?	F or U