Labor-hours (q) Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory administration Total expense $ $ $ 7,800 81,650 (9) + + 18,960 + Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Results $ $ 1.30 (9) (q) (q) 1.20 (q) $ $ 9,610 199,145 5,122 361,120 Spending Variances 2,662 F 1,580 U 0 None Flexible Budget $ 197,005 20,043 4,574 Activity Variances 960 U 0 None Planning Budget 9,130 26,060 4,430
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.
Ray Company provided the following excerpts from its Production Department’s flexible budget performance report.
Required:
Complete the Production Department’s Flexible Budget Performance Report.
Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round "rate per hour" answers to 2 decimal places.
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