In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items: Cost Formula Maintenance $34,500 + $1.25 DLH Power $0.50 DLH Indirect labor $68,400 + $2.30 DLH Rent $31,500 At the end of the year, Meliore, Inc., actually produced 310,000 units of the standard model and 115,000 of the deluxe model. The actual overhead costs incurred were: Maintenance $ 64,100 Power 12,420 Indirect labor 129,400 Rent 31,500 Required: Prepare a performance report for the period. If there is no variance, enter "0" for the amount and select "NA" in the last column.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items:
| Cost Formula | |
| Maintenance | $34,500 + $1.25 DLH |
| Power | $0.50 DLH |
| Indirect labor | $68,400 + $2.30 DLH |
| Rent | $31,500 |
At the end of the year, Meliore, Inc., actually produced 310,000 units of the standard model and 115,000 of the deluxe model. The actual overhead costs incurred were:
| Maintenance | $ 64,100 |
| Power | 12,420 |
| Indirect labor | 129,400 |
| Rent | 31,500 |
Required:
Prepare a performance report for the period. If there is no variance, enter "0" for the amount and select "NA" in the last column.
| Meliore, Inc. | ||||
| Performance Report | ||||
| For the Year Ended December 31 | ||||
| Actual | Variance | |||
| DLH for units produced | ||||
| Production costs: | ||||
| Total |
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