The Campo Company is a division of a large corporation. The Campo Company manufactures a single product in an automated operation.

For the year, 2012, the company's profit plan called for it to produce and sell 320,000 units, which would be a 10 percent market share. The units were to be manufactured at a standard variable cost of $6.00. Standard fixed costs are expected to be $640,000. Selling costs were budgeted at $100,000 of managed fixed costs plus .50 per unit commission. Administrative costs are primarily committed fixed costs.

2012 Budget Flexible Budget 2012 Actual
Units produced and sold 320,000 297,000

Sales $3,200,000 $2,889,810
Variable costs
Materials $ 480,000 $ 464,100
Labor 1,120,000 1,020,000
Overhead 320,000 287,000
Commission 160,000 148,500
$ 2,080,000 $ 1,919,600
Contribution margin $ 1,120,000 $ 970,210
Fixed costs
Manufacturing (640,000) (650,000)
Selling (100,000) (108,000)
Administrative (300,000) (293,000)
Division income $ 80,000 $ (80,790)

Required:

A. find out and enter the numbers that would go into the middle column marked Flexible Budget in the statement above. Remember that the Flexible Budget reflects anticipated actual results based on budgets/standards and actual levels of activity.

B. Fill in the schedule of variances listed below that will describe why the actual division loss of $80,790 differed so much from the budgeted division income of $80,000. (15 points)

Sales Price Variance
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Sales Volume Variance
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Variable Manufacturing Variances (TOTAL)
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Spending Variance on Fixed Selling Costs
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Spending Variance on Fixed Manufacturing Costs
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Spending Variance on Administrative Costs
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Total $160,790

C. The standard variable manufacturing cost unit per unit was based on the following: (15 points)

Materials: 3 pieces @ $.50 $1.50
Direct labor: .5 DLH @ $7.00 3.50
Variable overhead: .5 DLH @ $2.00 1.00
$6.00

Actual variable manufacturing costs were:

Materials: 910,000 pieces @ $.51 $ 464,100
Direct labor: 150,000 hours @ $6.80 1,020,000
Variable overhead: 287,000
$1,771,100

find out the following standard cost variances and place in the schedule below.

Material Price Variance
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Material Quantity (Efficiency) Variance
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Labor Rate (Price) Variance
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Labor Efficiency Variance
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Variable Overhead Spending (Budget, Price) Variance
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Variable Overhead Efficiency Variance
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