1. (TCO C) The following overhead data are for a department of a large company.

Question

1.                  (TCO C) The following overhead data are for a department of a large company.

                                                    Actual costs             Static
                                                     incurred                    budget

Activity level (in units)                     500                          450

Variable costs:
              Indirect materials              $5,950                      $5,382
              Electricity                        $1,112                      $1,008
Fixed costs:
              Administration                  $2,770                      $2,800
              Rent                                $5,120                      $5,100

Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department.

              (Points : 30)

Explanation / Answer

Actual Budgeted Budgeted Cost Variance Variance P.U 500 450 (for 500) Variable Cost Indirect Material                      5,950.00                           5,382.00              5,980.00                  (30.00) -0.06 Electricity                      1,112.00                           1,008.00              1,120.00                    (8.00) -0.016 Fixed Cost Admin                      2,770.00                           2,800.00              2,800.00                  (30.00) -0.06 Rent                      5,120.00                           5,100.00              5,100.00                    20.00 0.04 Total Cost                    14,952.00                        14,290.00            15,000.00                  (48.00) -0.096

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