Question
6.34 (LO 1) Flexible budgeting (CMA Adapted) Spitzer Specialty Furniture manufactures fur- niture for specialty shops throughout the Southwest. With annual sales of $12 million,
6.34 (LO 1) Flexible budgeting (CMA Adapted) Spitzer Specialty Furniture manufactures fur- niture for specialty shops throughout the Southwest. With annual sales of $12 million, the company has four major product lines-bookcases, magazine racks, end tables, and bar stools-each of which 6-44 CHAPTER 6 Performance Evaluation: Variance Analysis is managed by a different production manager. Since production is spread fairly evenly over the year, controller Sara Massey has prepared an annual budget that is divided into 12 monthly reporting periods. Spitzer uses a standard cost system and applies variable overhead on the basis of machine hours. Fixed manufacturing overhead is allocated to the product lines based on the square footage they occupy using a predetermined plantwide rate. The size of the occupied space varies considerably across prod- uct lines. At the monthly meeting to review June's results, Ken Ashley, manager of the bookcase line, received the following performance report.
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