Timberlake Company planned for a production and sales volume of 12,000 units.However,the company actually makes and sells 13,000 units. $\begin{array}{lrrr}
&\text { Per unit}\
&\text { standards}&\text { Static Budget}&\text { Flexible Budget}\
\text { Number of units } & & 12,000 & 13,000 \
\text { Sales revenue } & \$ 65.00 & \$ 780,000 & \$ 845,000 \
\text { Variable manufacturing costs: } & & & \
\text { Materials } & \$ 11.00 & \underline{132,000} & \underline{143,000 }\
\text { Labor } & \$ 9.00 & 108,000& 117,000\
\text { Overhead } & \$ 4.20 & 50,400 & 54,600\
\text { Variable general, selling, and }\
\text { administrative costs } & \$ 11.00 & 132,000& 143,000 \
\text { Contribution margin } & & \$ 357,600 & \$ 387,400\
\text { Fixed costs }\
\text {Manufacturing overhead}&&100,800&100,800\
\text { General, selling, and}\
\text { administrative costs } & \underline{ 45,000 }& \underline{ 45,000 }\
\text { Net income } & \underline{\$ 211,800} & \underline{ \$ 241,600}
\end{array}$

What was the total variable cost volume variance?
A) $29,800 unfavorable
B) $29,800 favorable
C) $35,200 unfavorable
D) $35,200 favorable

Question

Timberlake Company planned for a production and sales volume of 12,000 units.However,the company actually makes and sells 13,000 units. $\begin{array}{lrrr}
&\text { Per unit}\
&\text { standards}&\text { Static Budget}&\text { Flexible Budget}\
\text { Number of units } & & 12,000 & 13,000 \
\text { Sales revenue } & \$ 65.00 & \$ 780,000 & \$ 845,000 \
\text { Variable manufacturing costs: } & & & \
\text { Materials } & \$ 11.00 &  \underline{132,000} &  \underline{143,000 }\
\text { Labor } & \$ 9.00 & 108,000& 117,000\
\text { Overhead } & \$ 4.20 & 50,400 & 54,600\
\text { Variable general, selling, and }\ 
\text { administrative costs } & \$ 11.00 & 132,000& 143,000 \
\text { Contribution margin } & & \$ 357,600 & \$ 387,400\
\text { Fixed costs }\
\text {Manufacturing overhead}&&100,800&100,800\
\text { General, selling, and}\
\text { administrative costs } & \underline{ 45,000 }& \underline{ 45,000 }\
\text { Net income } &  \underline{\$ 211,800} & \underline{ \$ 241,600}
\end{array}$

What was the total variable cost volume variance?
A) $29,800 unfavorable
B) $29,800 favorable
C) $35,200 unfavorable
D) $35,200 favorable

Quizplus · Accepted Answer

Total variable cost volume variance can be calculated as follows:

(Total actual units produced and sold - Total budgeted units) * Budgeted variable cost per unit

= (13,000 - 12,000) * Budgeted variable cost per unit

= 1,000 * Budgeted variable cost per unit

Since we were not given the budgeted variable cost per unit, we cannot get the exact value of the variance. However, we can eliminate choices A and B since they give a fixed value of $29,800, regardless of the budgeted variable cost per unit.

Now we need to consider whether the variance is favorable or unfavorable. Since the actual units produced and sold exceed the budgeted units, we would expect total variable costs to be higher than budgeted, resulting in an unfavorable variance. Therefore, we can eliminate choice D, which suggests a favorable variance.

This leaves us with choice C as the answer: $35,200 unfavorable.

Timberlake Company Planned for a Production and Sales Volume of 12,000