eUsing Flexible Budgets

The following summary data are from a performance report for Hyland Company for May, during which $19,200$ units were produced. The budget reflects the company$$s normal capacity of $20,000$ units.

Actual Cost Budget

$19,20020,000$ Variances

units units $ Type

Direct material $$225,720$ $$231,000$ $$(5,280)$ Favorable

Direct labor $457,380462,000(4,620)$ Favorable

Variable overhead $162,360158,4003,960$ Unfavorable

Fixed overhead $119,460118,800660$ Unfavorable

Total $$964,920$ $$970,200$ $$(5,280)$ Favorable

a$.$ Prepare a new performance report using flexible budgeting. Round all amounts to the nearest dollar.

Actual Flexible Variance

Costs Budget $ Type

Direct material Answer

$0$

Answer

$0$

Answer

$0$

Answer

Unfavorable

Direct labor Answer

$0$

Answer

$0$

Answer

$0$

Answer

Unfavorable

Variable overhead Answer

$0$

Answer

$0$

Answer

$0$

Answer

Unfavorable

Fixed overhead Answer

$0$

Answer

$1$

Answer

$0$

Answer

Unfavorable

Totals

$0$

$1$

$0$

b$.$ Which of the two performance reports should Hyland Company management use to measure

the company's operating efficiency in May?

Answer

The performance report that compares actual costs to flexible budget costs.