The following data was used in developing the master manufacturing overhead budget for a manufacturing Department, which is based on an activity index of direct labor hours. Variable costs

Rate per Direct Labor Hour

Annual Fixed Costs Indirect labor

$0.43

Supervision

$42,240 Indirect materials

0.51

Depreciation

15,600 Factory utilities

0.34

Insurance

15,960 Factory repairs

0.20

Rent

23,280

The master overhead budget was prepared on the expectation that 477,800 direct labor hours will be worked during the year. In June, 43,300 direct labor hours were worked. Actual costs are shown below:

Variable costsper direct labor hour: indirect labor $0.47, indirect materials $0.49, factory utilities $0.38, and factory repairs $0.24. Fixed: same as budgeted. Required:

a) Make a flexible budget report for June compare actual results with budget

b) Discuss the benefits of using a flexible budget vs. a static budget