Question: INITIAL BUDGET INFORMATION Our initial plan was to make and sell 500 wrenches. We budgeted 2 lbs. of steel for each wrench, and expected to

INITIAL BUDGET INFORMATION Our initial plan was to make and sell 500 wrenches. We budgeted 2 lbs. of steel for each wrench, and expected to pay $1.50 per pound for the steel. We budgeted $20 per hour for labor, and expected it to take 3 hours to make each tool. Our initial plan was to sell the 500 wrenches for $120 each. We budgeted $8000 for insurance (fixed overhead), and we decided to use labor hours as the driver for allocating utilities costs (variable overhead). We expected to have $12,000 in utilities costs.

ACTUAL RESULTS (1) We receive an order for 550 units at $125.00 each (2) We purchase 1,400 lbs. of materials., paying 1,960.00, or $1.40 per lb. (3) We drawdown 1250 lbs. materials to produce 550 wrenches . (4) We drawdown (pay) $21.00 hr. for 1640 hours of labor to produce the 550 wrenches. (5) We incur variable overhead expenses (ex. - utilities) of $11,890.00. Variable overhead is applied using the budgeted Var. OH application rate. (6) Fixed overhead (insurance)costs are $7,800. Fixed overhead is deemed to be a period expense. (7) We sell all 550 units at $125 each.

Assignment: You are required to perform a analysis of variance, breaking total variance into its various elements, which are identified on the provided variance worksheets. You should discuss

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