Concept explainers
Preparing a flexible budget and performance report
This continues the Piedmont Computer Company situation from Chapter 22. Assume Piedmont Computer Company has created a
Direct materials | $300 per tablet |
Direct labor | 3 hours per tablet at $26 per hour |
Variable overhead | 3 hours per tablet at $5 per hour |
Fixed overhead | $54,000 per month |
During the month of September, Piedmont Computer Company incurred the following costs while manufacturing 1,100 PCC model tablets:
Direct materials | $ 341,000 |
Direct labor | 88,000 |
Variable overhead | 17,600 |
Fixed overhead | 56,320 |
Requirements
1. Prepare a flexible budget for September for 900,1,000, and 1,100 PCC model tablets. The tablet has a standard sales price of $675. List variable costs separately.
2. Using 1,000 PCC model tablets for the static budget, prepare a flexible budget performance report for September Total sales revenue for the month was $767,800. The company sold
1,100 tablets.
3. What insights can the management of Piedmont Computer Company draw from the performance report?
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