L'Evénement du Dimanche budgets to produce 300 000 copies of its monthly newspaper for August 2015. It is budgeted to run 15 000 000 print pages in August with 50 print pages per newspaper. Actual production in August 2015 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 2015 are:
Budgeted Actual
Direct materials.......................SFr 180 000..........SFr 224 640
Direct labour costs..........................45 000................50 112
Variable indirect costs......................60 000................63 936
Fixed indirect costs.........................90 000................97 000
Data pertaining to revenues for L'Evénement du Dimanche in August 2015 are:
Budgeted Actual
Circulation revenue..............SFr 140 000......SFr 154 000
Advertising revenue..................360 000...........394 600
L'Evénement du Dimanche sells for SFr 0.50 per copy in 2015. No change from this budgeted price of SFr 0.50 per copy occurred in August 2015. The actual direct labour rate in August 2015 was SFr 29.00 per hour. Actual and budgeted pages produced per direct labour-hour in August 2015 were 10 000 print pages. Copies produced but not sold have no value. Advertising revenue covers payments from all advertising sources.
Required
1. Present a static-budget variance (Level 1) report for L'Evénement du Dimanche.
2. Comment on the results in requirement 1.