Performance Report Based on Actual Production

Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for healthy dogs. SpecialDiet is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 80,000 bags of each product during the coming year. BasicDiet requires 0.20 direct labor hours per bag, and SpecialDiet requires 0.30 direct labor hours per bag. Ladan has developed the following fixed and variable costs for each of the four overhead items:

Overhead Item	Fixed Cost	Variable Rate per Direct Labor Hour
Maintenance	$57,250	$0.50
Power		0.40
Indirect labor	43,500	2.10
Rent	39,000

Assume that Healthy Pet actually produced 100,000 bags of BasicDiet and 90,000 bags of SpecialDiet. The actual overhead costs incurred were as follows:

Maintenance	$81,300		Indirect labor	$143,600
Power	18,700		Rent	39,000

2. Prepare a performance report for the period based on actual production. In the variance type column, select "F" for favorable and "U" for unfavorable. If the variance is zero, enter ("0") in the variance amount column and "N" for neither in the variance type column.

Healthy Pet Company
Performance Report
For the Current Year
	Actual	Budgeted	Variance	Variance Type (F or U or N)
Units produced
Production unit:
Maintenance	$	$	$
Power
Indirect labor
Rent
Total costs	$	$	$