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Flexible Budget

In an attempt to improve budgeting, the controller for Engersol, Inc., has developed a flexible budget for overhead costs. Engersol, Inc., makes two types of products, commercial floor cleaners and household floor cleaners. The company expects to produce 300,000 units of the commercial cleaner and 120,000 units of the household cleaner during the coming year. The commercial cleaner requires 0.04 direct labor hour per unit, and the household cleaner requires 0.06. The controller has developed the following cost formulas for each of the four overhead items:

	Cost Formula
Maintenance	$30,000 + $1.25 DLH
Power	$0.50 DLH
Indirect labor	$65,000 + $2.30 DLH
Rent	$28,000

At the end of the year, Engersol, Inc., actually produced 305,000 units of the commercial cleaner and 120,000 of the deluxe model. The actual overhead costs incurred were:

Maintenance	$ 56,900
Power	10,000
Indirect labor	108,700
Rent	28,000

Required:

Prepare a performance report for the period. If there is no variance, enter "0" for the amount and select "NA" in the last column.

blank	Actual	Budget	Variance	blank
DLH for units produced	- Select -	- Select -	- Select -	FavorableUnfavorableNA
Production costs:	blank	blank	blank	blank
DLH for units producedIndirect laborMaintenancePowerRent	$- Select -	$- Select -	$- Select -	FavorableUnfavorableNA
DLH for units producedIndirect laborMaintenancePowerRent	- Select -	- Select -	- Select -	FavorableUnfavorableNA
DLH for units producedIndirect laborMaintenancePowerRent	- Select -	- Select -	- Select -	FavorableUnfavorableNA
DLH for units producedIndirect laborMaintenancePowerRent	- Select -	- Select -	- Select -	FavorableUnfavorableNA
Total	$- Select -	$- Select -	$- Select -	FavorableUnfavorableNA

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