Question

Chubbs Inc.’s manufacturing overhead budget for the first quarter of 2017 contained the following data. Variable Costs Fixed Costs Indirect materials $11,100 Supervisory salaries $35,400 Indirect labor 10,000 Depreciation 7,100 Utilities 7,400 Property taxes and insurance 7,700 Maintenance 6,000 Maintenance 6,000 Actual variable costs were indirect materials $14,800, indirect labor $9,300, utilities $9,800, and maintenance $4,800. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,300. The actual activity level equaled the budgeted level. All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance. (a) Prepare a manufacturing overhead flexible budget report for the first quarter. (List variable costs before fixed costs.)

Answer 1

Answer:

$\left[\begin{array}{cccc}-&Budget&Variance&Actual\\IL&10,000&700&9,300\\IM&11000&-3,800&14,800\\Utilities&7,400&-2,400&9,800\\Maintenance&6,000&1,200&4,800\\Total  \: Variable&34,400&-4,300&38,700\\Supervisor&35,400&0&35,400\\Depreciation&7,100&0&7100\\PT and insurance&7,700&-600&8,300\\Maintenance&6,000&0&6,000\\Total \: Fixed&56,200&-600&56,800\\Total \: MO&90,600&-4,900&95,500\\\end{array}\right]$

Explanation:

We list them and subtract budget - actual

When actual is greater than budget the variance is negatine.

While budget being lower than actual is considered a positive variance.