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P11-58: p. 519-520

Problem 11-58 Flexible Budget, Overhead Variances

Shumaker Company manufactures a line of high-top basketball shoes. At the beginning of the year, the following plans for production and costs were revealed:

Pairs of shoes to be produced and sold	55,000
Standard cost per unit:
Direct materials	$15
Direct labor	12
VOH	6
FOH	3
Total unit cost	$36

During the year, a total of 50,000 units were produced and sold. The following actual costs were incurred:

Direct materials	$775,000	VOH	$310,000
Direct labor	590,000	FOH	180,000

There were no beginning or ending inventories of raw materials. In producing the 50,000 units, 63,000 hours were worked, 5% more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours.

Required:

• 1.Using a flexible budget, prepare a performance report comparing expected costs for the actual production with actual costs.
• 2.Determine the following: (a) Fixed overhead spending and volume variances and (b) Variable overhead spending and efficiency variances.