The cutting department of Liberty Manufacturing Company operated during September 2016 with the following manufacturing overhead cost budget based on 6,000 hours of monthly productive capacity:

The cutting department was operated for 5,500 hours during September and incurred the following manufacturing overhead costs:

Required
Using a flexible budgeting approach, prepare a performance report for the cutting department for September 2016, comparing actual overhead costs with budgeted overhead costs for 5,500 hours. Separate overhead costs into variable and fixed components and show the amounts of any variances between actual and budgeted amounts.

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Variable costs: Factory supplies. Indirect labor... Utilities (usage charge) LIBERTY MANUFACTURING COMPANY Cutting Department Overhead Budget (6,000 Hours) for the Month of September 2016 $ 48,000 72,000 36,000 144,000 Patent royalties on secret process. Total variable overhead. Fixed costs: Supervisory salaries.... Depreciation on factory equipment Factory taxes Factory insurance.. Utilities (base charge). Total fixed overhead Total manufacturing overhead.. $ 96,000 $300,000 140,000 40,000 24,000 32,000 $332,000 $632,000