the following question requires .........................................................................................................................

Manager is trying to complete the budgetary planning for the first half of 2022.

The Sales Manager has already completed the sales budget which the Production Manager utilized to prepare the production budget and direct materials budget.

The Production Manager has provided the following information and indicated that he was unable to complete the Direct Labour or Manufacturing Overhead Budgets before proceeding on annual vacation, as he was awaiting costing data.

The Finance Manager has been able to acquire the costing data.

All relevant data are as follows: Units to be produced

: Quarter 1: 10,000

Quarter 2: 12,000

Direct labor: 1 hour per unit at a rate of: $12 per hour for the first 10,000 labour hours;

and $15 per hour for any time above 10,000 hours per quarter (considered overtime).

variable overhead costs per direct labour hour Fixed Overhead costs per quarter

indirect materials $0.80 supervisor salary $42,000

Indirect Labour $1.20 Depreciation $16,000

Maintenance $0.50 Maintenance $12,000

Q2 2021 Static Budget 8,000 Actual Results 8,800 Static Budget Variance 800 U Direct labour Hours Variable Costs Indirect materials Indirect labor Maintenance Total Variable Costs A A A A $ $ $ 6,000 $ 8,800 $ 3,200 $ 18,000 $ 6,250 $ 9,000 $ 3,300 $ 18,550 $ 250 200 100 550 U 1,500 U Fixed Costs Supervisory salaries Depreciation Maintenance Total Fixed Costs $ $ $ $ 37,500$ 14,000$ 10,000 $ 61,500 $ 39,000 $ 14,000 $ 8,000 $ 61,000 $ 2,000 500 TITI Total Manufacturing Overhead $ 79,500 $ 79,550 $ 50 U The Assistant Finance Manager suggests that the Production Manager failed to adequately control costs as ALL actual variable costs exceeded plan. The Finance Manager has noted that this Static Variance Report is not a true reflection of performance as the level of activity differs. Required: Prepare a Flexible Budget Variance Report for Q2 2021. 10 Marks