Practice 1: a) What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance? 1. The cost accountant for Bradley, Inc., prepared the following monthly performance report relating to the Finishing Department: Budgeted Production Actual Production (6,000 Units) (6,500 Units) $99,600 55,200 9,000 64,200 Direct materials used. Direct labor Varable manufacturing overhead Fixed manufacturing overhead $90,000 48,000 6,000 66,000 b) What would the flexible budget amounts be for each of the following: a. Direct materials b. Direct labor Variable manufacturing overhead c. c) Compute the variances to the flexible budget amounts at the 6,500 unit level for the following (and indicate whether the variances are favorable (F) or unfavorable (U) a. Direct materials b. Direct labor Variable manufacturing overhead c. d) Suppose you are a manager reviewing these variances and you learn that your labor variance consists of a rate variance in one direction, greatly offset by an efficiency variance in the opposite direction resulting in the variance you calculated in e)b. above. What would you be looking at to try to explain these variances? Please mention at least one potential, if not probable, explanation for the variances you've observed for labor

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 3PA: Budgeted income statement and supporting budgets The budget director of Birding Homes Feeders Inc.,...

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Practice : (see attachemnt)

please address parts B, C, D

please show any calculations for reference

a) What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

The cost accountant for Bradley, Inc., prepared the following monthly performance report relating to the Finishing Department:

Budgeted Production Actual Production

number units: 6000 units 6500 units

Direct materials: $90,000 $99,600

Direct labor: $48,000 $55,200

Variable Manufacturing Overhead: $6,000 $9,000

Fixed Manufacturing Overhead: $66,000 $64,200

What would the flexible budget amounts be for each of the following:
1. Direct materials
2. Direct labor
3. Variable manufacturing overhead

Compute the variances to the flexible budget amounts at the 6,500 unit level for the following (and indicate whether the variances are favorable (F) or unfavorable (U):
1. Direct materials
2. Direct labor
3. Variable manufacturing overhead

Suppose you are a manager reviewing these variances and you learn that your labor variance consists of a rate variance in one direction, greatly offset by an efficiency variance in the opposite direction resulting in the variance you calculated in c)b. above. What would you be looking at to try to explain these variances? Please mention at least one potential, if not probable, explanation for the variances you’ve observed for labor.

Practice 1:
a) What is meant by the term flexible budget? What role do flexible budgets play in
evaluating performance?
1.
The cost accountant for Bradley, Inc., prepared the following monthly performance report
relating to the Finishing Department:
Budgeted
Production
Actual
Production
(6,000 Units) (6,500 Units)
$99,600
55,200
9,000
64,200
Direct materials used.
Direct labor
Varable manufacturing overhead
Fixed manufacturing overhead
$90,000
48,000
6,000
66,000
b) What would the flexible budget amounts be for each of the following:
a. Direct materials
b. Direct labor
Variable manufacturing overhead
c.
c) Compute the variances to the flexible budget amounts at the 6,500 unit level for
the following (and indicate whether the variances are favorable (F) or unfavorable
(U)
a. Direct materials
b. Direct labor
Variable manufacturing overhead
c.
d) Suppose you are a manager reviewing these variances and you learn that your
labor variance consists of a rate variance in one direction, greatly offset by an
efficiency variance in the opposite direction resulting in the variance you
calculated in e)b. above. What would you be looking at to try to explain these
variances? Please mention at least one potential, if not probable, explanation for
the variances you've observed for labor

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