B&L Landscapes, Inc. Mini Practice Part 5 Bill Graham and Larry Miller incorpora
ID: 2482959 • Letter: B
Question
B&L Landscapes, Inc. Mini Practice Part 5
Bill Graham and Larry Miller incorporated B&L Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer.
During 2015, B&L Landscapes, Inc. acquired a 30% interest in Crestline Pipe. The president of Crestline wants to develop a management report to evaluate Manufacturing Overhead costs. Bill and Larry want to help and have volunteered your services to provide some managerial reporting for Crestline.
Crestline Pipe distributes high-quality PVC pipe and has the following information for the month of March, 2015
Crestline Pipe
Manufacturing Overhead Budget (Static)
For the Month of March, 2015
Budgeted production in LF 117,500
Budgeted costs
Indirect materials ($0.30/DLH) 7,050
Indirect labor ($0.50/DLH) 11,750
Utilities ($0.40/DLH) 9,400
Maintenance ($0.25/DLH) 5,875
Salaries 42,000
Depreciation 16,800
Property taxes 2,500
Insurance 1,200
Janitorial 1,300
Total budgeted costs $97,875
Crestline Pipe
Manufacturing Overhead Costs (Actual)
For the Month of March, 2015
Actual production in LF 118,500
Actual costs
Indirect materials) 7,100
Indirect labor 11,825
Utilities 10,700
Maintenance 5,900
Salaries 42,000
Depreciation 16,800
Property taxes 2,500
Insurance 1,200
Janitorial 1,300
Total budgeted costs $99,325
Crestline Pipe had the following static budget and overhead costs for March. Manufacturing overhead is budgeted based on direct labor hours (DLH). Direct labor is budgeted at 12 minutes per linear foot (LF).
Instructions:
Prepare a flexible manufacturing overhead budget based on the following amounts produced.
115,500 LF
116,500 LF
117,500 LF
118,500 LF
119,500 LF
Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. Include your analysis of what variances should be investigated further.
Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable. Provide a brief evaluation of how this information could be used to measure the manufacturing manager’s performance.
The following are the created charts
Explanation / Answer
Manufacturing overhead Flexible Budget Production in LF 115500 116500 117500 118500 119500 Variable Costs Indirect Material 6930 6990 7050 7110 7170 Indirect labor 11550 11650 11750 11850 11950 Utilities 9240 9320 9400 9480 9560 Maintenance 5775 5825 5875 5925 5975 Total Variable costs 33495 33785 34075 34365 34655 Fixed Costs Slaries 42000 42000 42000 42000 42000 Depreciation 16800 16800 16800 16800 16800 Property Taxes 2500 2500 2500 2500 2500 Insurance 1200 1200 1200 1200 1200 Janitorial 1300 1300 1300 1300 1300 Total Fixed costs 63800 63800 63800 63800 63800 Total Budgeted cost 97295 97585 97875 98165 98455 Manufacturing overhead Flexible Budget Report Budget Actual Difference Favourable / 118500 118500 Unfavourable Production in LF Variable Costs Indirect Material 7110 7100 10 Favourable Indirect labor 11850 11825 25 Favourable Utilities 9480 10700 1220 Unfavourable Maintenance 5925 5900 25 Favourable Total Variable costs 34365 35525 1160 Unfavourable Fixed Costs Salaries 42000 42000 0 No effect Depreciation 16800 16800 0 No effect Property Taxes 2500 2500 0 No effect Insurance 1200 1200 0 No effect Janitorial 1300 1300 0 No effect Total Fixed costs 63800 63800 0 No effect Total Budgeted cost 98165 99325 1160 Unfavourable Responsibility report Manufacturing Overhead Budget Actual Difference Favourable / Controllable cost Unfavourable Indirect Material 7110 7100 10 Favourable Indirect labor 11850 11825 25 Favourable Utilities 9480 10700 1220 Unfavourable Maintenance 5925 5900 25 Favourable 34365 35525 1160 Unfavourable
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