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Chillax produces stress beanie balls. Production costs for the beanies are detailed below. Materials: each beanie needs .8 yards of fabric and two pounds of

Chillax produces stress beanie balls. Production costs for the beanies are detailed below.

Materials: each beanie needs .8 yards of fabric and two pounds of stuffing. Fabric is budgeted to cost $15 per yard and stuffing $4 per pound.

Direct labor is paid at $18 per hour. Each beanie takes 40 minutes to hand-finish.

Variable overhead is $21 per direct labor hour.

Fixed overhead amounts to $25,000 per month.

Required:

1.Prepare a case analysis that includes preparation of the expected production costs for March when the production target is 650 beanies.

[i.e., What is the production budget [total costs to budget] for the month of March?

2.If the actual output for February was 630 beanies and actual production costs totaled $54,280, how would you evaluate the month’s performance? Include a flexible budget to support your evaluation.


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Case Analysis Expected Production Costs for March Production Target 650 beanies Materials Costs Fabric 650 beanies 8 yardsbeanie 15yard 7800 Stuffing ... blur-text-image

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