Requirements for Part $2$

Budgeting and Variance Analysis

$8.$ Compute the sales budget, the production budget, the direct material usage and purchases budget, the

direct labor budget, the manufacturing overhead budget, the ending inventories budget, the cost of

goods sold budget, the selling and administration budget, the budgeted income statement, and the

cash budget for $2024.$

Skip to the end of $2024.$ At the end of $2024$ the following actual quantities and costs were recorded:

A total of $72,000$ entry$-$level Bat$$s and $13,500$ pro$-$series Bats were produced and sold in $2024$ at

average selling prices of $$85\mathrm{.}00$ and $$230\mathrm{.}00,$ respectively. A total of $300,000$ feet of Northern White

Ash wood was purchased for the entry$-$level Bats at a cost of $$2,505,000.$ A total of $60,000$ feet of

Rock Maple wood was purchased for the pro$-$series Bats at a cost of $$1,020,000.291,600$ feet of

Ash were used to produce the entry$-$level Bats, and $57,375$ feet of Maple were used to create the pro$-$

series Bats. $87,840$ direct labor hours were traced to the entry$-$level Bats, and $33,750$ direct labor

hours were traced to the pro$-$series Bats. A total of $$2,944,890$ in wages was paid to the

manufacturing workers $($traced to entry$-$level $$1,844,640$ and pro$-$series $$1,100,250$ workers$).$

Further, for manufacturing operations overhead actual fixed costs were $$172,400$ and actual variable

costs were $$364,770.$ For machine setup overhead costs, actual fixed costs were $$180,000,$ and actual

variable costs were $$219,051.$ Entry$-$level bats were produced in batches of $125$ bats and used $2\mathrm{.}95$

hours per batch. Pro$-$series bats were produced in batches of $20$ and used $8\mathrm{.}3$ hours per batch.

$8.$

a$.$ Calculate the direct material price variance, the direct material efficiency variance, the direct

labor price variance, and the direct labor efficiency variance for each of the product lines

separately. Also, for each MOH activity calculate the FMOH $($spending and production

volume$)$ variances for the Bat division and the VMOH $($spending and efficiency$)$ variances for

the two product lines.

b$.$ Which of the variances that you calculated should you investigate $$ and why? Provide possible

reasons for the variances.

$5$