Chapter 23, Problem P23.36CP

Preparing a flexible budget and performance report

This continues the Piedmont Computer Company situation from Chapter 22. Assume Piedmont Computer Company has created a standard cost card for the PCC model tablet computer, with overhead allocated based on direct labor hours:

Direct materials	$300 per tablet
Direct labor	3 hours per tablet at $26 per hour
Variable overhead	3 hours per tablet at $5 per hour
Fixed overhead	$54,000 per month

During the month of September, Piedmont Computer Company incurred the following costs while manufacturing 1,100 PCC model tablets:

Direct materials	$ 341,000
Direct labor	88,000
Variable overhead	17,600
Fixed overhead	56,320

Requirements

1. Prepare a flexible budget for September for 900,1,000, and 1,100 PCC model tablets. The tablet has a standard sales price of $675. List variable costs separately.

2. Using 1,000 PCC model tablets for the static budget, prepare a flexible budget performance report for September Total sales revenue for the month was $767,800. The company sold

1,100 tablets.

3. What insights can the management of Piedmont Computer Company draw from the performance report?