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Milieu Manufacturing Company Flexible Budgeting and Standard Costing Project The Milieu Manufacturing Company (MMC) makes and sells two products, A and B. Each product is made up of two raw materials, RM-1 and RM-2. Established standards and projected costs for the next year are as follows: Product A B Quantity Cost Quantity Cost Input Cost RM-1 $10/unit 2 units $20 3 units $30 RM-2 $15/unit 3 units $45 4 units $60 DLabor $20/hr. 4 hrs $80 5 hrs $100 VariableOH 50%DL$ 4 hrs $40 5 hrs $50 Total standard variable cost $185 $240 Budgeted selling price $500 $600 Fixed OH costs: $3,600,000, allocated on the practical capacity basis of 90,000 direct labor hours. Selling and Administrative costs: $2,000,000.Budgeted and actual unit and selling price gureS'were as follows: Product Budgeted sales Actual sales Actual production Actual average selling price Anticipated market size Anticipated market share Actual market size Actual market share A 3 10,000 units 7,000 units 11,325 units 6,000 units 11,500 units 1,500 units $490 $610 170,000 units 1 0% 165 .000 units ? Actual results were as follows: H3 in at B.Bal. Purchases Cost Pro not Pro uct B RM-l 2000 units 47,000 units S4?7,050 22,500 units 22,000 units RM-Z 4000 units 64.000 units $950,400 36,225 units 31,500 units DLahor $1,634,075 45,000 hrs 36,500 his Variable 0H $ 340,000 Fixed 0H $3 $75,000 Selling and Administration $2,036,000 Required: Part I. A. Produce a budgeted Income Statement E. Produce a exible budget Income Statement C. Produce an actual income Statement: assume that any beginning RM inventory cost the same per unit as this year's actual unit price. Assume there was no beginning FG inventory. D. What is the total operating income variance? Part II. A. For each product, calculate the 1. Materials price variance 2. Materials usage variance Part II. A. For each product, calculate the 1. Materials price variance 2. Materials usage variance 3. Direct labor rate variance 4. Direct labor efficiency variance 5. Variable overhead rate variance 6. Variable overhead efficiency variance B. Analyze MMC's variable cost variances and provide reasonable explanations for what may have caused them. C. In total, calculate the: 1. Fixed overhead budget variance 2. Fixed overhead volume variance 3. Amount of under or over-applied overhead 4. Overhead spending variance if MMC uses a three-way OH variance 5. Total overhead flexible budget variance if MMC uses a two-way OH variance. D. Taking into account all manufacturing variances, analyze MMC's operating efficiency. Part III. A. Calculate: 1. Individual and total selling price variances 2. The sales volume variance 3. The sales mix variance 4. The market size variance 5. The market share variance B. Taking all the sales and market variances into account, evaluate MMC's overall effectiveness