Budgeting and Variance Analysis Using Only a Single Unit-Level Driver

Lawson Dental Products produces two different dental instruments in its St. Louis plant: crown crimping pliers and curved crown scissors. Amy Bunker, production manager, was upset with the latest performance report which indicated that she was $110,000 over the manufacturing budget. Given the efforts that she and her workers had made, she was confident that they had met or beat the budget. Not only was she upset, but she was also genuinely puzzled by the results. Of the four major manufacturing inputs in the manufacturing cost budget (direct materials, direct labor, power, and setups), only the direct materials input was not over budget. The actual costs for these four inputs follow:

Direct materials $100,000 Direct labor 320,000 Power 135,000 Setups Total 140,000 $695,000