Problem 1) Static budget variance and Flexible budgetvariance

Sonnet Inc. has the following information for March 2018.

Master Budget for March 2018 Salesvolume………………………...……………….2,100 diskettes

Average selling price per diskette……………………$5.00/diskette

DM costs per diskette………………………………..$0.85/diskette

DM cost per lb……………………………….$17.00/lb

DM per diskette……………………………..0.05 lb/diskette

Direct Labor:

Direct labor cost per hour……………………..$15.00/hr

# of diskettes produced per labor hour……….. 30 diskettes

Direct Marketing costs………………………………$0.30 /diskette

Fixed overhead costs………………………………..$850/month

Actual for March 2018

Sales volume ………………………………………..1,800 diskettes

Average selling price………………………………..$4,80/diskette

DM costs per diskette………………………………..$0.80/diskette

DM cost per lb……………………………….$20.00/lb

DM per diskette……………………………..0.04 lb/diskette

Direct Labor:

Direct labor cost per hour……………………..$15.00/hr

# of diskettes produced per labor hour……….. 25 diskettes

Direct Marketing costs………………………………$0.30 /diskette

Fixed overhead costs………………………………..$820/month

Required: Compute the following:

1) Static-budget variance for operating income (OI).

2) Flexible-budget variance for sales revenue.

3) Flexible-budget variance for OI.

4) Sales-volume variance for OI.

5) Rate (price) and Efficiency (quantity) variance for directlabor cost.

6) Price and Quantity variance for direct material cost.