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REQUIRED: Prepare an analysis of the variances below: 1. Contribution margin variance and Contribution margin volume variance 2. Sales price variance and Sales volume variance
REQUIRED:
Prepare an analysis of the variances below:
1. Contribution margin variance and Contribution margin volume variance
2. Sales price variance and Sales volume variance
3. Market share variance and Market size variance
Flandro Company uses a standard cost system and sets predetermined overhead rates on the basis of direct labor-hours. The following data are taken from the company's budget for the current year: Denominator activity (direct labor-hours) 5,000 Variable manufacturing overhead cost. $25,000 Fixed manufacturing overhead cost $59,000 The standard cost card for the company's only product is given below: Direct materials, 3 yards at $4.40 per yard. .... ..$13.20 Direct labor, 1 hour at $12 per hour .... 12.00 Manufacturing overhead, 140% of direct labor cost ... .. 16.80 Standard cost per unit ... ..$42.00 During the year, the company produced 6,000 units of product and incurred the following costs: Materials purchased, 24,000 yards at $4.80 per yard. ...... $115,200 Materials used in production (in yards). .. 18,500 Direct labor cost incurred, 5,800 hours at $13 per hour ..... $75,400 Variable manufacturing overhead cost incurred $29,580 Fixed manufacturing overhead cost incurred $60,400 Flandro performance report during the year as follows: Actual Units sold 5,000 Sales $350,000 Market size (in units) 100,000 Budgeted 4,000 $290,000 100,000
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