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

Standard price and variable costs
Sales price	$	36.70
Materials cost		8.60
Labor cost		4.00
Overhead cost		5.50
Selling, general, and administrative costs		6.60
Planned fixed costs
Manufacturing overhead	$	135,000
Selling, general, and administrative		51,000

Solomon planned to make and sell 22,000 copies of the book.

Required:

a. - d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 21,000 and 23,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 23,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

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

Standard price and variable costs
Sales price	$	36.40
Materials cost		8.00
Labor cost		3.80
Overhead cost		5.60
Selling, general, and administrative costs		7.00
Planned fixed costs
Manufacturing overhead	$	128,000
Selling, general, and administrative		50,000

Assume that Thornton actually produced and sold 28,000 books. The actual sales price and costs incurred follow:

Actual price and variable costs
Sales price	$	35.40
Materials cost		8.20
Labor cost		3.70
Overhead cost		5.65
Selling, general, and administrative costs		6.80
Actual fixed costs
Manufacturing overhead	$	113,000
Selling, general, and administrative		56,000

Required

a. & b. Determine the flexible budget variances and also indicate the effect of each variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

Master Budget Flexible Budgets Volume Variances 22,000 Number of units Sales revenue Variable manufacturing costs 21,000 23,000 Materials Labor Manufacturing overhead Variable selling general, and administrative costs Contribution margin Fixed costs Manufacturing overhead Fixed selling, general, and administrative costs Net income Flexible Budget Variances Sales revenue Variable manufacturing costs Materials Labor Overhead Selling, general,and administrative costs Contribution margin Fixed costs Manufacturing overhead Selling, general, and administrative costs Net income