Question

Question1

As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Sunland Company for the month of October.

SUNLAND LUMPANY Clothing Department Budget Report For the Month Ended October 31, 2020 Difference Favorable Unfavorable Neither Favorable Budget Actual nor Unfavorable Sales in units 7,800 10,000 2,200 Favorable Variable expenses Sales commissions $1,872 $2,400 $528 Unfavorable Advertising expense 936 900 36 Favorable Travel expense 3,120 4,000 880 Unfavorable Free samples given out 1,794 7,722 1,300 8,600 494 Favorable 878 Unfavorable Total variable Fixed expenses Rent 1,700 1,700 -O- Neither Favorable nor Unfavorable Sales salaries Office salaries 1,100 800 400 1,100 800 400 -O- Neither Favorable nor Unfavorable -- Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable Depreciation-autos (sales staff) Total fixed 4,000 4,000 -0- Neither Favorable nor Unfavorable Total expenses $11,722 $12,600 $878 Unfavorable

As a result of this budget report, Joe was called into the president’s office and congratulated on his fine sales performance. He was reprimanded, however, for allowing his costs to get out of control. Joe knew something was wrong with the performance report that he had been given. However, he was not sure what to do, and comes to you for advice.

Prepare a budget report based on flexible budget data to help Joe.

  

Question 2

Concord Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.

Indirect labor		$1.10
Indirect materials		0.60
Utilities		0.40

Fixed overhead costs per month are Supervision $4,200, Depreciation $1,500, and Property Taxes $700. The company believes it will normally operate in a range of 6,700–9,700 direct labor hours per month.

Assume that in July 2020, Concord Company incurs the following manufacturing overhead costs.

question 2 needs parts a and b

thank you!

Answer 1

Question 2

a)

CONCORD COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2020
			Difference
	Budget	Actual	Favorable Unfavorable Neither Favorable Nor Unfavorable
Direct labor hours	8700	8700
Variable costs:
Indirect labor	(8700*$1.10)= $9570	$9370	(9570-9370)= 200	Favorable
Indirect materials	(8700*$0.60)= 5220	5040	(5220-5040)= 180	Favorable
Utilities	(8700*$0.40)= 3480	3050	(3480-3050)= 430	Favorable
Total variable costs	18270	17460	810	Favorable
Fixed costs:
Supervision	4200	4200	0	NONE
Depreciation	1500	1500	0	NONE
Property taxes	700	700	0	NONE
Total fixed cost	6400	6400	0	NONE
Total cost	$24670	$23860	$810	Favorable

b)

CONCORD COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2020
			Difference
	Budget	Actual	Favorable Unfavorable Neither Favorable Nor Unfavorable
Direct labor hours	8100	8100
Variable costs:
Indirect labor	(8100*$1.10)= $8910	$9370	(8910-9370)= 460	Unfavorable
Indirect materials	(8100*$0.60)= 4860	5040	(4860-5040)= 180	Unfavorable
Utilities	(8100*$0.40)= 3240	3050	(3240-3050)= 190	Favorable
Total variable costs	17010	17460	450	Unfavorable
Fixed costs:
Supervision	4200	4200	0	NONE
Depreciation	1500	1500	0	NONE
Property taxes	700	700	0	NONE
Total fixed cost	6400	6400	0	NONE
Total cost	$23410	$23860	$450	Unfavorable