The following overhead data are for a department of a large company. Actual Cost
ID: 2415399 • Letter: T
Question
The following overhead data are for a department of a large company.
Actual Costs Incurred
Static Budget
Activity level (in units)
800
750
Variable costs:
Indirect materials
$6,850
$6,600
Electricity
$1,312
$1,275
Fixed costs:
Administration
$3,570
$3,700
Rent
$3,320
$3,200
Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department
Actual Costs Incurred
Static Budget
Activity level (in units)
800
750
Variable costs:
Indirect materials
$6,850
$6,600
Electricity
$1,312
$1,275
Fixed costs:
Administration
$3,570
$3,700
Rent
$3,320
$3,200
Explanation / Answer
Flexible Budget Actual Standard Variance Activity Level (In Units) 800 800 Variable Costs: Indirect Material 6,850 7,040 190 Favorable (6600/750 X 800) Electricity 1,312 1,360 48 Favorable (1275/750 X 800) Fixed Cost Administration 3,570 3,700 130 Favorable Rent 3,320 3,200 120 Unfavourable Total Costs 15,052 15,300 248 Favorable
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