The following data is from the Osterheld Wallet Company.They manufacture one type of designer wallet in different colors.They budgeted to manufacture and sell 1,000 wallets but actually manufactured and sold 1,200 wallets.They have the capacity to manufacture 1,500 wallets.

The following data is provided:

Price and Variable Costs Per Unit:

Standard

Actual

Sales Price

$200.00

$190.00

Direct Materials Cost

25.00

27.00

Direct Labor Cost

18.00

16.00

General, Selling, and Administrative (G,S,&A) Cost

6.00

5.00

Expected Fixed Costs in Total:

Manufacturing

$100,000

$90,000

General, Selling, and Administrative

45,000

60,000

Requirement 1: Calculate the flexible budget variances and the volume variances for the Osterheld Company and indicate whether each variance is Favorable (F) or Unfavorable (U).

Requirement 2: Provide a possible explanation for each of the following flexible budget variances:

Direct Material

Direct Labor

Fixed Manufacturing

Fixed G, S and A