At the end of 2020, Cyril Fedako, CFO for Central Products, received a report comparing budgeted and actual production costs for the company’s plant in Forest Lake, Minnesota: 

His first thought was that costs must be out of control since actual costs exceed the budget by $585,000. However, he quickly recalled that the budget was set assuming a production level of 60,000 units. The Forest Lake plant actually produced 65,000 units in 2020. 

Required 

Given that production was greater than planned, should Cyril expect that all actual costs will be greater than budgeted? Which costs would you expect to increase, and which costs would you expect to remain relatively constant?

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Manufacturing Costs Forest Lake Plant Budget versus Actual 2020 Difference Budget Actual (Actual Minus Budget) Materials $3,200,000 $3,500,000 $300,000 Direct labor 2,300,000 2,500,000 200,000 Supervisory salaries 475,000 500,000 25,000 Utilities 125,000 135,000 10,000 Machine maintenance 350,000 380,000 30,000 Depreciation of building Depreciation of equipment 90,000 90,000 -0- 250,000 255,000 5,000 Janitorial 220,000 235,000 $7,595,000 15,000 Total $7,010,000 $585,000