B&L Landscapes, Inc. Mini Practice Part 5 Bill Graham and Larry Miller incorpora
ID: 2535553 • Letter: B
Question
B&L Landscapes, Inc.
Mini Practice Part 5
Bill Graham and Larry Miller incorporated B&L Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer. During 2015, B&L Landscapes, Inc. acquired a 30% interest in Crestline Pipe. The president of Crestline wants to develop a management report to evaluate Manufacturing Overhead costs. Bill and Larry want to help and have volunteered your services to providesome managerial reporting for Crestline. Crestline Pipe distributes high-quality PVC pipe and has the following information for the month of March, 2015
Crestline Pipe
Manufacturing Overhead Budget (Static)
For the Month of March, 2015
Budgeted production in LF 117,500
Budgeted costs
Indirect materials ($0.30/DLH) 7,050
Indirect labor ($0.50/DLH) 11,750
Utilities ($0.40/DLH) 9,400
Maintenance ($0.25/DLH) 5,875
Salaries 42,000
Depreciation 16,800
Property taxes 2,500
Insurance 1,200
Janitorial 1,300
Total budgeted costs $97,875
Crestline Pipe
Manufacturing Overhead Costs (Actual)
For the Month of March, 2015
Actual production in LF 118,500
Actual costs
Indirect materials 7,100
Indirect labor 11,825
Utilities 10,700
Maintenance 5,900
Salaries 42,000
Depreciation 16,800
Property taxes 2,500
Insurance 1,200
Janitorial 1,300
Total budgeted costs $99,325
Crestline Pipe had the following static budget and overhead costs for March. Manufacturing overhead is budgeted based on direct labor hours (DLH). Direct labor is budgeted at 12 minutes per linear foot (LF).
Instructions:
1. Prepare a flexible manufacturing overhead budget based on the following amounts produced.
a)115,500 LF
b) 116,500 LF
c) 117,500 LF
d) 118,500 LF
e) 119,500 LF
2. Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. Include your analysis of what variances should be investigated further.
3. Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable. Provide a brief evaluation of how this information could be used to measure the manufacturing manager’s performance.
RECORDING TABLES:
B&L Landscapes Inc
Manufacturing Overhead Flexible Budget
for the Month of March, 2015
B&L LANDSCAPES INC.
Manufacturing Overhead Flexible Budget Report
for the Month of March, 2015
B&L LANDSCAPES INC.
Responsibility Report Manufacturing Overhead
for the Month of March, 2015
Production in LF 115500 116500 117500 118500 119500 Variable Costs Indirect Materials Indirect Labor Utilities Maintenance TOTAL VARIABLE COSTS Fixed Costs: Salaries Depreciation Property Taxes Insurance Janitorial TOTAL FIXED COSTS: TOTAL BUDGET COSTS:Explanation / Answer
1.
2.
The costs for which there is a significant favorable or unfavorable variance and which are controllable should be investigated further such as the utilities cost.
3.
The controllable manufacturing overhead costs are those costs which can be controlled or influenced by the manufacturing manager. The responsibility report shows how well the manufacturing manager has been able to control these costs which are within his sphere of influence. From the responsibility report for the month of March it is seen that there is an unfavorable variance of $1160 which means that the actual costs have exceeded the budgeted costs and the manager has not been able to control the costs which is a negative indicator of his/her performance.
B&L LANDSCAPES, INC. Manufacturing Overhead Flexible Budget For the Month of March, 2015 Production in LF 115500 116500 117500 118500 119500 Variable costs Indirect materials 6930 6990 7050 7110 7170 Indirect labor 11550 11650 11750 11850 11950 Utilities 9240 9320 9400 9480 9560 Maintenance 5775 5825 5875 5925 5975 Total variable costs 33495 33785 34075 34365 34655 Fixed costs Salaries 42000 42000 42000 42000 42000 Depreciation 16800 16800 16800 16800 16800 Property taxes 2500 2500 2500 2500 2500 Insurance 1200 1200 1200 1200 1200 Janitorial 1300 1300 1300 1300 1300 Total fixed costs 63800 63800 63800 63800 63800 Total budgeted costs 97295 97585 97875 98165 98455Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.