L’Evénement du Dimanche budgets to produce 300 000 copies of its monthly newspaper for August 2008. It is budgeted to run 15 000 000 print pages in August with 50 print pages per newspaper. Actual production in August 2008 was 320 000 copies with 17 280 000 print pages run. Each paper was only 50 print pages, but quality problems with paper led to many pages being unusable.
Variable costs comprise direct materials, direct labour, and variable indirect costs. Variable and fixed indirect costs are allocated to each copy on the basis of print pages. The driver for all variable costs is the number of print pages. Data pertaining to August 2008 are:
Data pertaining to revenues for L’Evénement du Dimanche in August 2008 are:
L’Evénement du Dimanche sells for SFr 0.50 per copy in 2008. No change from this budgeted price of SFr 0.50 per copy occurred in August 2008. The actual direct labour rate in August 2008 was SFr 29.00 per hour. Actual and budgeted pages produced per direct labour-hour in August 2008 were 10 000 print pages. Copies produced but not sold have no value.
Advertising revenue covers payments from all advertising sources.
1. Present a static-budget variance (Level 1) report for L’Evénement du Dimanche.
2. Comment on the results in requirement 1.