Budgets and Variance Analysis. Sams Products has one product and the following costs per unit to make one finished product: Direct materials per unit: 5 pounds @ $1 per bag Direct labor per unit: 3 hours @ $10/hour Variable overhead (based on Direct Labor Hours): 3 hours at $2/DLH The planning budget was based on producing and selling 1,000 units. However, during the period, the company incurred the following costs: (a) 5700 pounds were used to produce 1100 finished products. Cost per bag was $0.95 (b) Direct laborers worked 3200 hours at a rate of $13.00 per hour (c) Total variable manufacturing overhead for the month was $6700 (d) Fixed Expense information is not given in this example (e) Sales price per unit is $50

Homework Problem #3: Prepare three budgets. A Planning Budget at 1000 units. A Flexible Budget at 1100 units. An Actual Results Budget at 1100 units. Prepare a Variance Analysis by comparing the Flexible Budget to the Actual Results Budget.

Homework Problem #4: Showing the formulas, calculate the following variances: a) Materials Quantity Variance b) Materials Price Variance c) Labor Rate Variance d) Labor Efficiency Variance e) Variable overhead Rate Variance f) Variable Overhead Efficiency Variance.