Use the flexible budget prepared in P7-4 for the 29,000-unit level of activity and the actual operating
Question:
Use the flexible budget prepared in P7-4 for the 29,000-unit level of activity and the actual operating results below for the 29,000-unit level.
Required:
1. Prepare a performance report.
2. List the major reason why the actual operating income at 29,000 units differs from the master budget operating income at 30,000 units in Figure.
3. Given the level that the company operated at, how was its cost control?
Item
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,200,000
Direct materials:
Lumber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565,000
Paint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121,000
Direct labor:
Cutting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000
Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,200
Painting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,600
Variable factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202,000
Variable selling and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 741,300
Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,000
Fixed selling and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .770,200
Step by Step Answer: