... Direct material Direct labor... Variable overhead. Fixed overhead.. Total.... Budget (10,000 Units) $140,000 280,000 96,000 72,000 $588,000 Actual Costs (9,600 Units) $136,800 277,200 98,400 72,400 $584,800 Variances $3,200 F 2,800 F 2,400 U 400 U $3,200 F What is the general implication of the performance report? Why might Sterling question the sig- nificance of the report? b. Revise the performance report using flexible budgeting, and comment on the general implication of the revised report.
... Direct material Direct labor... Variable overhead. Fixed overhead.. Total.... Budget (10,000 Units) $140,000 280,000 96,000 72,000 $588,000 Actual Costs (9,600 Units) $136,800 277,200 98,400 72,400 $584,800 Variances $3,200 F 2,800 F 2,400 U 400 U $3,200 F What is the general implication of the performance report? Why might Sterling question the sig- nificance of the report? b. Revise the performance report using flexible budgeting, and comment on the general implication of the revised report.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:a.
Is the flexible budget variance for fixed costs?
LO2 E11-2A. Using Flexible Budgets The following summary data are from a performance report for Sterling
Company for May, during which 9,600 units were produced. The budget reflects the company's not-
mal capacity of 10,000 units.
Transcribed Image Text:Direct material
Direct labor...
Variable overhead.
Fixed overhead..
Total..
Budget
(10,000 Units)
$140,000
280,000
96,000
72,000
$588,000
Actual Costs
(9,600 Units)
$136,800
277,200
98,400
72,400
$584,800
Variances
$3,200 F
2,800 F
2,400 U
400 U
$3,200 F
What is the general implication of the performance report? Why might Sterling question the sig-
nificance of the report?
b. Revise the performance report using flexible budgeting, and comment on the general implication
of the revised report.
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