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topic 9 sol - 7-34 1a(60 min Comprehensive variance...

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7-34 (60 min.) Comprehensive variance analysis, responsibility issues. 1a. Actual selling price = $82.00 Budgeted selling price = $80.00 Actual sales volume = 4,850 units Selling price variance = (Actual sales price - Budgeted sales price) × Actual sales volume = ($82 - $80) × 4,850 = $9,700 Favorable 1b. Development of Flexible Budget Budgeted Unit Amounts Actual Volume Flexible Budget Amount Revenues $80.00 4,850 $388,000 Variable costs DM - Frames $2.20/oz. × 3.00 oz. 6.60 a 4,850 32,010 DM - Lenses $3.10/oz. × 6.00 oz. 18.60 b 4,850 90,210 Direct manuf. labor $15.00/hr. × 1.20 hrs. 18.00 c 4,850 87,300 Total variable manufacturing costs $209,520 Fixed manufacturing costs 75,000 Total manufacturing costs 284,520 Gross margin $103,480 a $33,000 ÷ 5,000 units ; b $93,000 ÷ 5,000 units; c $90,000 ÷ 5,000 units Actual Results (1) Flexible- Budget Variances (2)=(1)-(3) Flexible Budget (3) Sales - Volume Variance (4)=(3)-(5) Static Budget (5) Units sold 4,850 4,850 5,000 Revenues $397,700 $ 9,700 F $388,000 $ 12,000 U $400,000 Variable costs DM - frames 37,248 5,238 U 32,010 990 F 33,000 DM - lens 100,492 10,282 U 90,210 2,790 F 93,000 Direct labor 96,903 9,603 U 87,300 2,700 F 90,000 Total variable costs 234,643 25,123 U 209,520 6,480 F 216,000 Fixed manuf. costs 72,265 2,735 F 75,000 0 75,000 Total costs 306,908 22,388 U 284,520 6,480 F 291,000 Gross margin $ 90,792 $12,688 U $103,480 $ 5,520 U $109,000 Level 2 $12,688 U $ 5,520 U
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