Exercise 15-11 (Static) Performance reporting and flexible budgeting LO 4,5 Following is a partially completed performance report for a recent week for direct labor in the binding department of a book publisher: Original Budget Flexed Budget $1,800 Actual Budget Variance $1,888 Direct labor The original budget is based on the expectation that 3,000 books would be bound; the standard is 20 books per hour at a pay rate of $12 per hour. During the week, 2,860 books were actually bound. Employees worked 160 hours at an actual total cost of $1,888. Required: a. Calculate the flexed budget amount against which actual performance should be evaluated and then calculate the budget variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) b. Calculate the direct labor efficiency variance in terms of hours. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) c. Calculate the direct labor rate variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). a. Flexed budget Budget variance b. Direct labor efficiency variance c. Direct labor rate variance hours
Exercise 15-11 (Static) Performance reporting and flexible budgeting LO 4,5 Following is a partially completed performance report for a recent week for direct labor in the binding department of a book publisher: Original Budget Flexed Budget $1,800 Actual Budget Variance $1,888 Direct labor The original budget is based on the expectation that 3,000 books would be bound; the standard is 20 books per hour at a pay rate of $12 per hour. During the week, 2,860 books were actually bound. Employees worked 160 hours at an actual total cost of $1,888. Required: a. Calculate the flexed budget amount against which actual performance should be evaluated and then calculate the budget variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) b. Calculate the direct labor efficiency variance in terms of hours. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) c. Calculate the direct labor rate variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). a. Flexed budget Budget variance b. Direct labor efficiency variance c. Direct labor rate variance hours
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:Exercise 15-11 (Static) Performance reporting and flexible budgeting LO 4, 5
Following is a partially completed performance report for a recent week for direct labor in the binding department of a book publisher:
Original Budget Flexed Budget
$1,800
Actual Budget Variance
$1,888
Direct labor
The original budget is based on the expectation that 3,000 books would be bound; the standard is 20 books per hour at a pay rate of
$12 per hour. During the week, 2,860 books were actually bound. Employees worked 160 hours at an actual total cost of $1,888.
Required:
a. Calculate the flexed budget amount against which actual performance should be evaluated and then calculate the budget variance.
(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero
variance).)
b. Calculate the direct labor efficiency variance in terms of hours. (Indicate the effect of each variance by selecting "F" for favorable,
"U" for unfavorable, and "None" for no effect (i.e., zero variance).)
c. Calculate the direct labor rate variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting
"F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
Flexed budget
Budget variance
b. Direct labor efficiency variance
C. Direct labor rate variance
a.
hours
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