B&L; Landscapes, Inc. Mini Practice Part 5 Bill Graham and Larry Miller incorpor

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 Crestine 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 Crestine 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 Budgeted costs 117.500 Utilities ($0.40/DLH) Maintenance 1$0.25/DLH) Salaries Depreciation Property taxes nsurance Janitorial Indirect materials ($0.30/DLH) 7,050 Indirect labor $0.50/DLH 11,750 9,400 5,875 42,000 16,800 2,500 1,200 1.300 Total budgeted costs $97875 Crestline Pipe Manufacturing Overhead Costs (Actual) For the Month of March, 2015 Actual production in LF Actual costs Indirect materials) Indirect labor Utilities Maintenance Salaries Depreciation Property taxes nsurance Janitorial 7,100 11,825 10,700 5,900 42,000 16,800 2,500 1,200 1300 $99 325 Total budgeted costs 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)

Explanation / Answer

Master budget Actuals Flexible budget (a) Flexible budget (b) Flexible budget © Flexible budget d Flexible budget e Production 117500 118500 115500 116500 117500 118500 119500 Materials 7050 7100 6930 6990 7050 7110 7170 Indirect labour 11750 11825 11550 11650 11750 11850 11950 Utilities 9400 10700 9240 9320 9400 9480 9560 Maintenance 5875 5900 5775 5825 5875 5925 5975 Salaries 42000 42000 42000 42000 42000 42000 42000 Depreciation 16800 16800 16800 16800 16800 16800 16800 Property taxes 2500 2500 2500 2500 2500 2500 2500 Insurance 1200 1200 1200 1200 1200 1200 1200 Janotaria 1300 1300 1300 1300 1300 1300 1300 total cost 97875 99325 97295 97585 97875 98165 98455 Master budget Actuals Flexible budget d Variance Fav/Unfav Comments Production 117500 118500 118500 Materials 7050 7100 7110 10 Favourable Since all the cost are arrived based on direct labour hours, further analysis is required on all the variances to understand if the impact is due to DLH budgeted vs Actual DLH or rate budgeted Vs Actual rate. Indirect labour 11750 11825 11850 25 Favourable Utilities 9400 10700 9480 -1220 Unfavourable Maintenance 5875 5900 5925 25 Favourable

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