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Variable Costs

Fixed Costs

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(a)

LOWELL COMPANY
Manufacturing Overhead Flexible Budget Report
For the Quarter Ended March 31, 2014

Difference

Budget

Actual

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

Lowell Company’s manufacturing overhead budget for the first quarter of 2014 contained the following data.

Variable Costs

Fixed Costs

Indirect materials $11,796 Supervisory salaries $35,239 Indirect labor 10,365 Depreciation 6,788 Utilities 7,320 Property taxes and insurance 7,525 Maintenance 5,522 Maintenance 5,091
Actual variable costs were indirect materials $14,742, indirect labor $9,246, utilities $9,505, and maintenance $4,898. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $9,008. 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.

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Explanation / Answer

overhead flexible budget

Actual Flexible Favorable or unfavorable

Indirect material 14742 11796 2946 U

Indirect labour 9246 10365 1119 F

Utilities 9505 7320 2185 U

Maintenance 4898 5522 624F

supervisior salary 35239 35239 N

Depreciation 6788 6788 N

Property tax insurance 9008 7525 1483 U

maintenance 5091 5091 N

Total overhead 94517 89646 4871 U

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