B&L Landscapes, Inc. Mini Practice Part 5 Bill Graham and Larry Miller incorpora
ID: 2534942 • 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: 1. Prepare a flexible manufacturing overhead budget based on the following amounts produced. a) 115,500 LF b) 116,500 LF c) 117,500 LF d) 118,500 LF e) 119,500 LF 2. 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. 3. 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.
ACC122 Accounting Principles II
B&L LANDSCAPES, INC.
Manufacturing Overhead Flexible Budget
For the Month of March, 2015
Production in LF 115,500 116,500 117,500 118,500 119,500
Variable Costs
Indirect Materials
Indirect Labor
Utilities
Maintenance
Total Variable Costs
Fixed Costs
Salaries
Depreciation
Property Taxes
Insurance
Janitorial
Total Fixed Costs
Total Budgeted Costs
ACC122 Accounting Principles II
B&L LANDSCAPES, INC.
Manufacturing Overhead Flexible Budget Report
For the Month of March, 2015
Budget Actual Difference " Favorable/
Unfavorable "
Production in LF
Variable Costs
Indirect Materials
Indirect Labor
Utilities
Maintenance
Total Variable Costs
Fixed Costs
Salaries
Depreciation
Property Taxes
Insurance
Janitorial
Total Fixed Costs
Total Budgeted Costs
ACC122 Accounting Principles II
B&L LANDSCAPES, INC.
Responsibility Report Manufacturing Overhead
For the Month of March, 2015
Constrollable Cost Budget Actual Difference " Favorable/
Unfavorable "
Indirect Materials
Indirect Labor
Utilities
Maintenance
Explanation / Answer
1) Prepare a flexible manufacturing overhead budget based on the following amounts produced. B&L LANDSCAPES, INC. Manufacturing Overhead Flexible Budget For the Month of March, 2015 Production in LF 115,500 116,500 117,500 118,500 119,500 Variable Costs Indirect Materials ($0.30/DLH x 12 min./60 min. 6,930 6,990 7,050 7,110 7,170 Indirect Labor ($.50/DLH x 12min/60 Min) 11550 11650 11750 11850 11950 Utilities ($.40/DLH x 12 min/60 Min) 10395 10485 10575 10665 10755 Maintenance ($.25/DLH x 12 min/60Min) 5775 5825 5875 5925 5975 Total Variable Costs 34,650 34,950 35,250 35,550 35,850 Fixed Costs Salaries 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 Costs 98,450 98,750 99,050 99,350 99,650 2) B&L LANDSCAPES, INC. Manufacturing Overhead Flexible Budget Report For the Month of March, 2015 Budget Actual Difference F/UF Production in LF Variable Costs 118,500 118,500 Indirect Materials 7,110 7,100 10 F Indirect Labor 11,850 11,825 25 F Utilities 10,665 10,700 35 U Maintenance 5,925 5,900 25 F Total Variable Costs 35,550 35,525 95 F Fixed Costs Salaries 42,000 42000 0 N Depreciation 16,800 16800 0 N Property Taxes 2,500 2500 0 N Insurance 1,200 1200 0 N Janitorial 1,300 1300 0 N Total Fixed Costs 63,800 63,800 0 N Total Budgeted Costs 99,350 99,325 25 F 3) B&L LANDSCAPES, INC. Responsibility Report Manufacturing Overhead For the Month of March, 2015 Controllable Cost Budget Actual Difference Indirect Materials 7,110 7,100 10 Indirect Labor 11,850 11,825 25 Utilities 10,665 10,700 35 Maintenance 5,925 5,900 25 Total Variable Cost 35,550 35,525 25
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