Preparing a monthly overhead performance report. The monthly flexible manufacturing overhead budget for the Assembly Department of the Callas Corporation is given below.

During the month of May 19X1, the departmental volume was 9,100 direct labor hours. Actual costs for the month were as follows:

Instructions 1. Complete the monthly departmental overhead performance report (Exhibit 2). The costs for depreciation and for taxes and insurance are noncontrollable. Com- pare the budgeted costs for the actual volume attained with the actual costs for the month.

2. Which of the costs appear to be well controlled?

3. Which of the costs appear to be out of line?

4. Give some possible explanations for the lack of control over the items that appear to be significantly out of line.

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Variable Cost Element Fixed Direct Labor Hours Cost per Hour Element 9,000 9,500 10,000 10,500 11,000 Indirect Labor $ 30 $2,000 $ 4,700 $4,850 $5,000 $5,150 $ 5,300 Payroll Taxes and Fringe Benefits 1.20 1,000 11,800 12,400 13,000 13,600 14,200 Indirect Materials .10 100 1,000 1,050 1,100 1,150 1,200 Power and Water .20 30 1,830 1,930 2,030 2,130 2,230 Depreciation 600 600 600 600 600 600 Taxes and Insurance 400 400 400 400 400 400 Repairs .04 115 475 495 515 535 555