Delta Rubber Plastic Company Ltd manufactures rubber chairs and tables. The company’s accountant, has prepared the overhead budget shown below:

The company had a great year with the actual sales of 125,000 units. However, the overhead budget report reported major overruns.

Required

1. For each category of overhead, compute a variance, identifying unfavorable variances in indirect materials,  indirect labor, supervisory salaries, and utilities.
2. Comment on the performance of the company
3. Prepare a flexed budget and compare the actual performance of the company. Comment on your result.
4. Compare the actual performance with the flexed budget. Comment on your observation.

Transcribed Image Text:

Delta Rubber Plastic Company Ltd. Overhead Budget for the Year Ended December 31, 2020 Budgeted production 100,000 Units Indirect materials Indirect labor Supervisory salaries Rent Utilities Depreciation Total overhead $ 50,000 $ 40,000 $100,000 $ 80,000 $ 40,000 $ 20,000 $330,000