Managerial Accounting Project - Fall 2021 Part 1 (70 points) Sundazzler Designs has prepared the annual manufacturing budget for its line of specialty pergolas. It estimated annual production of 3,000 pergolas during 2022. Each pergola will require 54 pounds of lumber and one metal kit (which includes attachments and decorative embellishments.). The lumber used in these pergolas costs $1.50 per pound, and the metal kits cost $170 each. Each pergola will use two kinds of labor2 hours of type I labor from people who run the cutting saws and finishing tools, and 3 hours of work from type II workers who attach the metal reinforcements and other hardware. The type I employees are paid $15 per hour, and the type II are paid $12 per hour. The Manufacturing Overhead budget is listed below: Variable costs Indirect materials $42,000 Manufacturing supplies 58,800 Maintenance and utilities 72,000 Total variable MOH: 172,800 Fixed costs Supervision 60,000 Insurance 16,000 Depreciation 132,000 Total fixed MOH: 208,000 Total $380,800 Requirement 1: Prepare the annual manufacturing budget for 2022, assuming that 3,000 pergolas will be produced. Requirement 2: Peak sales occur during the summer months, so management expects production to be highest in the first two quarters of the year. Prepare the flexible budget for manufacturing for the quarter ended March 31, 2022, assuming that production is a) 750 units, b) 900 c) 1,050 units and d) 1,200 units. You have to prepare a separate budget for each level of activity. (Hint: The fixed costs above were for the entire year. This budget is for the quarter only). These are ANNUAL amounts

During the first quarter, ended March 31, 2022, 900 units were actually produced with the following costs. Lumber $77,200 Metal kits 155,000 Type I labor 31,500 Type II labor 35,400 Indirect materials 13,380 Manufacturing supplies 18,200 Maintenance and utilities 19,700 Supervision 15,450 Insurance 3,700 Depreciation 33,000 Total $402,530 Requirement 3 Assuming that the pergola line is treated as a cost center, prepare a flexible budget report (where you compare actual to budgeted amounts and determine whether it is F or U) for manufacturing for the quarter ended March 31, 2022, assuming 900 units were actually produced. Round all budgeted amounts to the nearest dollar. Requirement 4 Prepare a brief report about how well management contained costs for the quarter. In your report, state what you think could be causing the cost variances. Part 2 (30 points) The accounting manager reviewed the cost reports and noted the following actual costs for a particular order that consisted of 20 pergolas: *1,150 pounds of lumber were purchased at a total cost of $2,280. *Twenty-two (22) metal kits were assembled at a total cost of $3,840. *Type I employees worked 35 hours on this project at a total cost of $585. *Type II finishing employees worked 57 hours at a total cost of $690. These are the actual amounts for the quarter.

The standard costs to make each finished pergola are: o 54 pounds of lumber at $1.50 per pound o 1 metal kit at $170 o 2 hours of type I labor from people who run the saws and cutting tools at a standard wage rate of $15 per hour o 3 hours of type II labor from people who attach the metal finishes and other hardware at a standard wage rate of $12 per hour. Required: Calculate the 1) price variance and 2) quantity variance for each item below: a. Lumber Price variance: (AQ X AP) (AQ X SP) Quantity Variance: (AQ x SP)- (SQ X SP) b. Metal kits. Price variance: (AQ X AP) (AQ X SP) Quantity Variance: (AQ x SP)- (SQ X SP) c. Type I workers. Price variance: (AH X AR) (AH X SR) Quantity Variance: (AH x SR)- (SH X SR) d. Type II workers. Price variance: (AH X AR) (AH X SR) Quantity Variance: (AH x SR)- (SH X SR)