Handover Company uses a flexible budget for overhead based on direct labor hours

Question

Handover Company uses a flexible budget for overhead based on direct labor hours (DLH). Annual master budget figures, based on 400,000 direct labor hours, and actual overhead for March, when 30,000 labor hours were worked, are as follows:

                                                                           Master Budget March Actual

Variable:

         Indirect labor                                                  $   24,000 $ 1,900

         Indirect materials                                                45,000             3,300

         Other                                                                 280,000           21,100

Fixed:

         Supervision                                                       120,000           10,000

         Depreciation                                                       54,000             4,600

         Other                                                                 216,000           17,700

Instructions: Prepare a flexible budget performance report for March. Omit headings other than descriptive columnar headings.

FLEXIBLE BUDGET PERFORMANCE REPORT:

Explanation / Answer

Prepare a flexible budget performance report for March. Omit headings other than descriptive columnar headings.

Flexible budget Actual Variance Variable Indirect labor    1800 1900 100 U Indirect material 3375 3300 75 F Other 21000 21100 100 U Fixed Supervision 9000 10000 1000 U Depreciation 4050 4600 550 U Other 16200 17700 1500 U Total 55425 58600 3175 U

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