Emerald Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2017: Expected production and sales $7,000 unitsExpected selling price per unit 680Total fixed costs $1,400,000 Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manu- facturing labor: Standard Quantity Standard Price Standard Unit CostDirect materials 10 pounds $ 8 per pound $ 80Direct manufacturing labor 3.7 hours $ 50 per hour $ 185 During 2017, actual number of units produced and sold was 4,800, at an average selling price of $720. Ac- tual cost of direct materials used was $392,700, based on 66,000 pounds purchased at $5.95 per pound. Direct manufacturing labor-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual direct manufacturing labor costs were $878,400. Actual fixed costs were $1,170,000. There were no beginning or ending inventories. Required: 1. Calculate the sales-volume variance and flexible-budget variance for operating income. 2. Compute price and efficiency variances for direct materials and direct manufacturing labor.

In this exercise we have to use business knowledge to calculate the variance of each of the items requested in the given text, in this way we find that:

1) Sales volume variance, we can say that is  unfavorable amd flexible-budget variance we can say that is favorable.

2) Price variance we can say that is unfavorable and efficiency variances is favorable.  For direct manufacturing labor we can say that  price variance is unfavorable and efficiency variances is favorable.

So calculating the variance for the items, we find that:

1)To calculate the variance in sales volume we will use the formula:

Replacing the values informed in the text, we find that:

So the variance in sales volume is equal  to and we can also say that it is unfavorable.

To calculate the variance in flexible-budget we will use the formula:

Replacing the values informed in the text, we find that:

So the variance in flexible-budget is equal  to and we can also say that it is favorable.

b) To calculate the variance in price variance we will use the formula:

Replacing the values informed in the text, we find that:

So the variance in price variance is equal  to and we can also say that it is unfavorable.

To calculate the variance in efficiency variances we will use the formula:

Replacing the values informed in the text, we find that:

So the variance in efficiency variances  is equal  to and we can also say that it is favorable.

To calculate the variance in price variance we will use the formula:

Replacing the values informed in the text, we find that:

So the variance in price variance is equal  to and we can also say that it is unfavorable.

To calculate the variance in efficiency variances we will use the formula:

Replacing the values informed in the text, we find that:

So the variance in efficiency variances  is equal  to and we can also say that it is favorable.

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a) Sales volume variance = $1496000 unfavorable

flexible-budget variance = $192000 favorable

b) For direct materials

Price variance = `$135000 unfavorable

efficiency variances = $527920 favorable

For direct manufacturing labor

Price variance = `$36600 unfavorable

efficiency variances = $914815 favorable

Explanation:

a) Sales volume variance = (Actual units sold - Budgeted units sold) x Budgeted price per unit = (4800 - 7000) × $680 = $1496000 unfavorable

flexible-budget variance =  (Actual price - Budgeted price) x Actual units sold= ($720 - $680) × 4800 = $192000 favorable

b) For direct materials

Price variance = (Actual cost - standard cost) x Actual quantity of units purchased = ($5.95/ pound - $8/pound) × 66000 pound= `$135000 unfavorable

efficiency variances = (Actual unit - Standard unit) x Standard cost per unit = (66000 pound - 10 pound) × $8 per pound= $527920 favorable

For direct manufacturing labor

Price variance = (Actual cost - standard cost) x Actual hours = ($48/hour - $50/hour) × 18300 hours = `$36600 unfavorable

efficiency variances = (Actual hours - Standard hours) x Standard cost per hour= (18300 hour - 3.7 hour) × $50/hour = $914815 favorable

hi there, i would say your answer is:

b. there is a fixed quantity of resources and technology available.

hope that : )