1. The following information is from ABC Manufacturings static budget for 2020:

Expected production and sales : 60,000 units

Expected selling price per unit : $300

Expected variable manufacturing overhead costs : $1,800,000 ($15/direct

manufacturing labour hour,

120,000 hours)

Expexted total fixed manufacturing costs : $2,500,000

Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manufacturing labor:

	Standard Quantity	Standard Price	Standard Unit Cost
Direct materials	4 kgs	$25 per kg	$100
Direct manufacturing labor	2 hours	$25 per hour	$50

During 2020, actual number of units produced and sold was 50,000, at an average selling price of $310. Actual cost of direct materials used was $5,040,000, based on 210,000 kgs purchased at $24 per kg. Direct manufacturing labor-hours actually used were 105,000, at the rate of $26 per hour. As a result, actual direct manufacturing labor costs were $2,730,000. Actual variable overhead costs were $1,680,000 and actual fixed costs were $2,450,000. There were no beginning or ending inventories.

1. Calculate the flexible-budget variance for operating income.

	Actual Result	Flexible-Budget Variances		Flexible Budget
Units Sold
Revenues
Variable Costs:
Direct Materials Costs
Direct Labor Costs
Variable Manufacturing O/H
Total Variable Costs
Contribution Margin
Fixed Manufacturing O/H
Operating Income