Preparing a Flexible Budget for Performance Reporting Suppose you receive the following performance report from the accounting department for your first month as plant manager for a new company. Your supervisor, the vice president of manufacturing, has concerns that the report does not provide an accurate picture of your performance in the area of cost control. Actual Budgeted Variance Units Costs: 10,000 12,000 2,000 U Direct materials $358,800 Direct labor $414,600 Variable manufacturing overhead $216,000 Fixed manufacturing overhead Total costs $432,000 $73,200 F $518,400 $103,800 F $259,200 $43,200 F $450,000 $432,000 $18,000 U $1,439,400 $1,641,600 $202,200 F REQUIRED Prepare a variance analysis Note: Do not use negative signs with your answers. Static Budget Activity Variance Flexible Budget Flexible Budget Variance Units (in cases) 12,000 10,000 Actual 10,000 ✓ Static (Total) Variance Costs: Direct materials Direct labor Variable overhead $ $ 432,000 $ $ 504,000 x $ 360,000 * F 420,000 x F ÷ $ $ 360,000 $ 420,000 * $ 216,000 * $ 180,000 * U $ 180,000 * $ 356,800 x F ÷ $ 414,600 x F ÷ $ 299,200 x 356,800 x $ 414,600 $ (3,200) x F $ 299,200 x $ (5,400) x F 119,200 x U ÷ く ÷ く ÷ × Fixed overhead $ 432,000 $ 0 ✓ $ 432,000 $ 4,500,000 U = $ 450,000 $ 18,000 U ÷ く Total costs $ 1584000 $ 960000 U ÷ * 1392000 $ -128600 F ÷ $ 1520600 $ 63400 U ÷
Preparing a Flexible Budget for Performance Reporting Suppose you receive the following performance report from the accounting department for your first month as plant manager for a new company. Your supervisor, the vice president of manufacturing, has concerns that the report does not provide an accurate picture of your performance in the area of cost control. Actual Budgeted Variance Units Costs: 10,000 12,000 2,000 U Direct materials $358,800 Direct labor $414,600 Variable manufacturing overhead $216,000 Fixed manufacturing overhead Total costs $432,000 $73,200 F $518,400 $103,800 F $259,200 $43,200 F $450,000 $432,000 $18,000 U $1,439,400 $1,641,600 $202,200 F REQUIRED Prepare a variance analysis Note: Do not use negative signs with your answers. Static Budget Activity Variance Flexible Budget Flexible Budget Variance Units (in cases) 12,000 10,000 Actual 10,000 ✓ Static (Total) Variance Costs: Direct materials Direct labor Variable overhead $ $ 432,000 $ $ 504,000 x $ 360,000 * F 420,000 x F ÷ $ $ 360,000 $ 420,000 * $ 216,000 * $ 180,000 * U $ 180,000 * $ 356,800 x F ÷ $ 414,600 x F ÷ $ 299,200 x 356,800 x $ 414,600 $ (3,200) x F $ 299,200 x $ (5,400) x F 119,200 x U ÷ く ÷ く ÷ × Fixed overhead $ 432,000 $ 0 ✓ $ 432,000 $ 4,500,000 U = $ 450,000 $ 18,000 U ÷ く Total costs $ 1584000 $ 960000 U ÷ * 1392000 $ -128600 F ÷ $ 1520600 $ 63400 U ÷
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter7: The Master Budget And Flexible Budgeting
Section: Chapter Questions
Problem 7P: Preparing a performance report Use the flexible budget prepared in P7-6 for the 31,000-unit level...
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Transcribed Image Text:Preparing a Flexible Budget for Performance Reporting
Suppose you receive the following performance report from the accounting department for your first month as plant manager for a new company. Your supervisor, the vice president of manufacturing, has concerns that the report does not provide an accurate picture of your
performance in the area of cost control.
Actual
Budgeted Variance
Units
Costs:
10,000
12,000
2,000 U
Direct materials
$358,800
Direct labor
$414,600
Variable manufacturing overhead
$216,000
Fixed manufacturing overhead
Total costs
$432,000 $73,200 F
$518,400 $103,800 F
$259,200 $43,200 F
$450,000 $432,000 $18,000 U
$1,439,400 $1,641,600 $202,200 F
REQUIRED
Prepare a variance analysis
Note: Do not use negative signs with your answers.
Static Budget Activity Variance
Flexible Budget Flexible Budget Variance
Units (in cases)
12,000
10,000
Actual
10,000 ✓
Static (Total) Variance
Costs:
Direct materials
Direct labor
Variable overhead $
$
432,000
$
$
504,000 x $
360,000 * F
420,000 x F
÷ $
$
360,000 $
420,000 * $
216,000 * $
180,000 * U
$
180,000 * $
356,800 x F ÷ $
414,600 x F ÷ $
299,200 x
356,800 x $
414,600 $
(3,200) x F
$ 299,200 x $
(5,400) x F
119,200 x U
÷ く
÷ く
÷ ×
Fixed overhead
$
432,000 $
0 ✓
$
432,000 $
4,500,000 U
=
$
450,000 $
18,000 U
÷ く
Total costs
$
1584000 $
960000 U
÷
*
1392000 $
-128600 F ÷ $
1520600 $
63400 U
÷
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