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Archer, LLC, owns a blueberry processing plant. Last month, the plant generated

ID: 2344518 • Letter: A

Question

Archer, LLC, owns a blueberry processing plant. Last month, the plant generated the following information: blueberries processed, 50,000 pounds; direct materials, $50,000; direct labor, $10,000; variable overhead, $12,000; and fixed overhead, $13,000. There were no beginning or ending inventories. Average daily pounds processed (25 business days) were 2,000. Average rate of processing was 250 pounds per hour.
At the beginning of the month, Archer had budgeted cost of blueberries, $45,000; direct labor, $10,000; variable overhead, $14,000; and fixed overhead, $14,000. The monthly master budget was based on producing 50,000 pounds of blueberries each month. This means that the plant had been projected to process 2,000 pounds daily at the rate of 240 pounds per hour.
Using this information, prepare a performance report for the month for the blueberry processing plant. Include a flexible budget and a computation of variances in your report. Indicate whether the variances are favorable (F) or unfavorable (U) to the performance of the plant

Explanation / Answer

Budget

Actual

Variances

F/U

Avg daily pounds processed

2000

2000

0

Pounds per hour

240

250

-10

Processed pounds

50000

50000

0

0

Cost info:

0

Direct material

45000

50000

-5000

U

Direct labor

10000

10000

0

Variable Over head

14000

12000

2000

F

Fixed over head

14000

13000

1000

F

Budget

Actual

Variances

F/U

Avg daily pounds processed

2000

2000

0

Pounds per hour

240

250

-10

Processed pounds

50000

50000

0

0

Cost info:

0

Direct material

45000

50000

-5000

U

Direct labor

10000

10000

0

Variable Over head

14000

12000

2000

F

Fixed over head

14000

13000

1000

F

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