Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 66,000 fans evenly over the next quarter at the following costs: direct material, $1,584,000; direct labor, $330,000; variable production overhead, $458,700; and fixed production overhead, $951,000. The $951,000 amount includes $69,000 of straight-line depreciation and $129,000 of supervisory salaries. Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: 448,900 104,500 159,000 23,000 44,700 245,000 $ 1,025,100 Direct material Direct labor Variable production overhead Depreciation Supervisory salaries Other fixed production overhead Total $ Dave Kellerman and his crews turned out 18,000 fans during the month-a remarkable feat given that the firm's manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job.
Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 66,000 fans evenly over the next quarter at the following costs: direct material, $1,584,000; direct labor, $330,000; variable production overhead, $458,700; and fixed production overhead, $951,000. The $951,000 amount includes $69,000 of straight-line depreciation and $129,000 of supervisory salaries. Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: 448,900 104,500 159,000 23,000 44,700 245,000 $ 1,025,100 Direct material Direct labor Variable production overhead Depreciation Supervisory salaries Other fixed production overhead Total $ Dave Kellerman and his crews turned out 18,000 fans during the month-a remarkable feat given that the firm's manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1. Prepare a performance report that compares static budget and actual costs for the period just ended (i.e., the report that Kellerman likely used when assessing his performance
Transcribed Image Text:Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 66,000 fans evenly over the next quarter at
the following costs: direct material, $1,584,000; direct labor, $330,000; variable production overhead, $458,700; and fixed production
overhead, $951,000. The $951,000 amount includes $69,000 of straight-line depreciation and $129,000 of supervisory salaries.
Shortly after the conclusion of the quarter's first month, Johnson reported the following costs:
$ 448,900
104,500
159,000
23,000
44,700
245,000
$ 1,025,100
Direct material
Direct labor
Variable production overhead
Depreciation
Supervisory salaries
Other fixed production overhead
Total
Dave Kellerman and his crews turned out 18,000 fans during the month-a remarkable feat given that the firm's manufacturing plant
was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall
financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as
Johnson's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes
of keeping his job.
Transcribed Image Text:Prepare a performance report that compares static budget and actual costs for the period just ended (i.e., the report that
Kellerman likely used when assessing his performance).
Note: Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect
(i.e., zero variance). Do not round intermediate calculations.
Total
Static Budget:
$
0
Variance
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