EXHIBIT 14.8 A Detailed Comparison of Actual Variable Costs and Flexible Budget Variable Costs: Product XV-1 (October 2022)

SCHMIDT MACHINERY COMPANY
October 2022
Product XV-1
Units Manufactured: 780
Actual Variable Costs Incurred
Direct materials:
Aluminum	3,630 pounds* at $26 per pound	$94,380
PVC	720 pounds at $41 per pound	29,520		$123,900
Direct labor	3,510 hours at $42 per hour			147,420
Variable factory overhead		40,630
Total variable cost of goods manufactured		$311,950
Variable selling and administrative expenses		39,000
Total variable costs incurred		$350,950

Flexible Budget for Variable Costs
Direct materials:
Aluminum	780 units 4 pounds per unit $25 per pound =	$78,000
PVC	780 units 1 pound per unit $40 per pound =	31,200		$109,200
Direct labor	780 units 5 hours per unit $40 per hour =			156,000
Variable factory overhead	780 units 5 hours per unit $12 per hour =			46,800
Total standard variable cost of goods manufactured		$312,000
Variable selling and administrative expenses		39,000
Total flexible budget variable costs		$351,000

Variable Cost Flexible Budget Variances
Direct materials:
Aluminum	$94,380 ? $78,000 =	$16,380	U
PVC	29,520 ? 31,200 =	1,680	F	$14,700	U
Direct labor	147,420 ? 156,000 =			8,580	F
Variable factory overhead	40,630 ? 46,800 =			6,170	F
Variable manufacturing cost flexible budget variance		$ 50	F
Variable selling and administrative expense variance		0
Variable cost flexible budget variance (see Exhibit 14.6)		$ 50	F

*Assume that pounds purchased = pounds used.

U denotes an unfavorable variance.

F denotes a favorable variance.