Flexible Budgets and Performance Evaluation

Presented is the January performance report for the Production Department of Nowwhat Company.

NOWWHAT COMPANYProduction Department Performance ReportFor Month of JanuaryActualStatic BudgetVolume$50,00046,000$Manufacturing costs:Direct materials$$130,500$$$124,200$Direct labor$$118,000$$$105,800$Variable overhead$$72,000$$$69,000$Fixed overhead$$252,000$$$250,000$Total$$572,500$$$549,000$

REQUIRED

a$.$ Evaluate the performance report.

The performance report Answer $1$appropriatelyinappropriately compares the actual costs of manufacturing Answer $2$ units with the budgeted costs of manufacturing Answer $3$ units. The result is a series of Answer $4$favorableunfavorable variances for variable manufacturing costs. The actual variable costs of manufacturing Answer $5$ units are expected to Answer $6$be less thanbe the same asexceed the budgeted variable costs for Answer $7$ units. This is because variable costs change in proportion to changes in Answer $8$cost levelsprice levelstimevolume.

b$.$ Prepare a more appropriate performance report.

Prior to developing such a budget, determine the standard variable costs per unit below.

BudgetUnitsStandard Unit Variable CostDirect materialsAnswer $9$Answer $10=$Direct laborAnswer $11$Answer $12=$Variable overheadAnswer $13$Answer $14=$

Note: enter all numbers as a positive number.

NOWWHAT COMPANYProduction Department Performance ReportFor the Month of JanuaryStatic BudgetActivity VarianceFlexible BudgetFlexible Budget VarianceActualStatic $($Total$)$ VarianceVolume in unitsAnswer $15$Answer $16$Answer $17$Manufacturing costs:Direct materialsAnswer $18$Answer $19$Answer $20$FUAnswer $21$Answer $22$Answer $23$FUAnswer $24$Answer $25$Answer $26$FUDirect laborAnswer $27$Answer $28$Answer $29$FUAnswer $30$Answer $31$Answer $32$FUAnswer $33$Answer $34$Answer $35$FUVariable overheadAnswer $36$Answer $37$Answer $38$FUAnswer $39$Answer $40$Answer $41$FUAnswer $42$Answer $43$Answer $44$FUFixed overheadAnswer $45$Answer $46$Answer $47$Answer $48$Answer $49$FUAnswer $50$Answer $51$Answer $52$FUTotalAnswer $53$FUAnswer $54$FUAnswer $55$FU