McNeal Concrete makes precast concrete steps for use with manufactured housing. The company had the following 2010 budget based on expected production of 6,400 units:

Actual production for 2010 was 7,000 units, and actual costs for the year were as follows:
Direct material used ..........$161,000
Direct labor ............. 84,600
Variable overhead
Indirect material ........... 28,000
Indirect labor ............. 13,300
Utilities ............... 7,700
Fixed overhead
Supervisory salaries ........... 82,000
Depreciation .............. 30,000
Insurance .............. 17,600
Total ................ $424,200
Cost per unit = $424,200 ÷ 7,000 = $60.60
The plant manager, Tanzi Palate, whose annual bonus includes (among other factors) 20 percent of the net favorable cost variances, states that he saved the company $3,850 [($61.15 - $60.60) × 7,000]. He has instructed the plant cost accountant to prepare a detailed report to be sent to corporate headquarters comparing each component's actual per-unit cost with the per-unit amounts in the preceding annual budget to prove the $3,850 cost savings.
a. Is the actual-to-budget comparison proposed by Palate appropriate? If his comparison is not appropriate, prepare a more appropriate comparison.
b. How would you, as the plant cost accountant, react if Palate insisted on his comparison? Suggest what alternatives are available toyou.

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Standard Cost $22.00 12.00 Amount Budgeted Direct material Direct labor Variable overhead $140,800 76,800 Indirect material Indirect labor Utilities 4.20 1.75 1.00 26,880 11,200 6,400 Fixed overhead Supervisory salar Depreciation Insurance 80,000 30,000 19 es Total $391360 Cost per unit $391,380 6,400 $61.15