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. (20 points)

	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

2. Compute price and efficiency variances for direct materials and direct manufacturing labor. (20 points)

Direct Materials Price Varience
Direct Materials Efficiency Varience
Direct Labor Price Varience
Direct Labor Efficiency Varience