Tyson\'s Hardware uses a flexible budget planning information for its warehouse

Question

Tyson's Hardware uses a flexible budget planning information for its warehouse operations. For 20x3, company anticipated the would have 96,000 sales units for 664 customer shipments. Average storage bin usage for various inventories was estimated to be 200 per day. The costs and cost drivers were determined to be as follows: During the year, the warehouse processed 90,000 units for 600 customer shipments. The workers used 225 storage bins on average each day to sort, store, and process goods for shipment. The actual costs for 20x3 were:

Explanation / Answer

a. Static budget for 20*3 with static budget variance :

Static budget Actual Static budget variance

(96000 units) (90000units) (Static - Actual)

Product handling $11200 $10900 $300

Storage $600 $465 $135

Utilities $2440 $2020 $420

Shipping Clerks $1664 $1400 $264

Supplies $332 $340 ($8)

Note: product handling= $10000 + $1.25 / 100 * 96000

   = $10000 + $1200

   =$11200

Storage = $3 * 200days = $600

Utilities = 1000 + $1.50/100 * 96000

= $1000 + 1440

=$2440

Shippment clerks = 1000 + $1 * 664 Customer shipment

= $1000 + $664

= $1664

Supplies = $0.50 * 664Customer shippment

= $332

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