P 1. Beverage Products, LLC, manufactures metal beverage containers. The division that manufactures soft-drink beverage cans for the North American market has two plants that operate 24 hours a day, 365 days a year. The plants are evaluated as cost centers. Small tools and supplies are considered variable overhead.

Depreciation and rent are considered fixed overhead. The master budget for a plant and the operating results of the two North American plants, East Coast and West Coast, are as follows:

Required 1. Prepare a performance report for the East Coast plant. Include a flexible budget and variance analysis.
2. Prepare a performance report for the West Coast plant. Include a flexible budget and variance analysis.
3. Compare the two plants, and comment on their performance.
4. Explain why a flexible budget should be prepared.
Traditional and Variable Costing Income Statements

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Center costs Master East West Budget Coast Coast Rolled aluminum ($0.01) $4,000,000 $3,492,000 $5,040,000 Lids ($0.005) 2,000,000 1,980,000 2,016,000 Direct labor ($0.0025) 1,000,000 864,000 1,260,000 Small tools and supplies ($0.0013) 520,000 432,000 588,000 Depreciation and rent 480,000 480,000 480,000 Total cost $8,000,000 $7,248,000 $9,384,000