Create a spreadsheet to make a flexible budget and perform appropriate computations.

Cost Item Yearly Yearly Yearly Monthly Actual for Variable Indirect Materials Fixed Total Budget February Indirect Labor $ 960,000 $ 48,000 $1,008,000 $ 84,000 $ 99,000 294,000 156.000 Labor Fringe Benefits 450,000 37,500 29,500 1.656,000 30,000 Utilities 1,686,000 140,500 150,200 96,000 60,000 156,000 13,000 15,200 Repairs and Maintenance 96,000 30,000 126.000 10,500 14,700 Miscellaneous 48,000 36,000 84.000 7,000 7.475 Depreciation 72,000 72,000 6.000 6,000 Property Taxes & Insurance 86,400 86.400 7200 7.200 $3.150.000 $518,400 $3,668,400 $305.700 $325.075 Your group has discovered that production during the month was 11,200 units, requiring 89,600 direct labor hours. REQUIRED: Explain to the CEO how a flexible budget would be a better tool for evaluating the performance of this plant. Create a spreadsheet to perform appropriate computations and present it to the CEO while explaining your analysis. What are possible reasons for some of the variances? Which cost areas should be investigated (assume 5% or more off of the budget is considered significant)? Which personnel related to this plant should be called in to better determine the causes of significant deviations from the budget? Conclude your presentation by thanking the CEO for her time and asking if there are any questions or other matters that she wants to discuss. Another plant in your Division manufactures sets of hand weights. A new budgeting system has just been implemented. The budget was based on carefully prepared sales forecast and production schedules. It was anticipated that during the year 120,000 sets would be manufactured, spread equally over each month and requiring 960,000 direct labor hours. The overhead budget was based on careful analysis of fixed and variable costs. The CEO is disturbed because the actual costs for February were over the budgeted amounts. The accountant's report showed the yearly and monthly budgeted amounts and the actual results for February as follows: Cost Item Yearly Yearly Yearly Monthly Actual for Variable Indirect Materials Fixed Total Budget February Indirect Labor $ 960,000 $ 48,000 $1,008,000 $ 84,000 $ 99,000 294,000 156.000 Labor Fringe Benefits 450,000 37,500 29,500 1.656,000 30,000 Utilities 1,686,000 140,500 150,200 96,000 60,000 156,000 13,000 15,200 Repairs and Maintenance 96,000 30,000 126.000 10,500 14,700 Miscellaneous 48,000 36,000 84.000 7,000 7.475 Depreciation 72,000 72,000 6.000 6,000 Property Taxes & Insurance 86,400 86.400 7200 7.200 $3.150.000 $518,400 $3,668,400 $305.700 $325.075 Your group has discovered that production during the month was 11,200 units, requiring 89,600 direct labor hours. REQUIRED: Explain to the CEO how a flexible budget would be a better tool for evaluating the performance of this plant. Create a spreadsheet to perform appropriate computations and present it to the CEO while explaining your analysis. What are possible reasons for some of the variances? Which cost areas should be investigated (assume 5% or more off of the budget is considered significant)? Which personnel related to this plant should be called in to better determine the causes of significant deviations from the budget? Conclude your presentation by thanking the CEO for her time and asking if there are any questions or other matters that she wants to discuss. Another plant in your Division manufactures sets of hand weights. A new budgeting system has just been implemented. The budget was based on carefully prepared sales forecast and production schedules. It was anticipated that during the year 120,000 sets would be manufactured, spread equally over each month and requiring 960,000 direct labor hours. The overhead budget was based on careful analysis of fixed and variable costs. The CEO is disturbed because the actual costs for February were over the budgeted amounts. The accountant's report showed the yearly and monthly budgeted amounts and the actual results for February as follows