Figure 8

Torino, Inc., manufactures machine parts. Torino has developed a fixed budget for its plant at an activity level of 10,000 parts for the month of March. The actual level of activity was 11,000 parts. The following table summarizes the static budget and the actual costs for March:

Fixed Budget Actual Costs

(10,000 parts) (11,000 parts) Variance

Variable costs $21,000 $22,000 $1,000 U

Fixed costs 7,800 7,700 100 F

Total $28,800 $29,700 $900 U

a. Refer to Figure 8. Using a flexible budget, which of the following describes how well the plant manager performed for the month of March?

a The manager performed a good job in controlling costs.

b	The manager performed a poor job in controlling costs.

c	The manager exceeded his goals.

d	both a and c

e	cannot be determined

b.

Refer to Figure 8. What is the total cost for the flexible budget for March?

a

$28,800

b

$29,800

c

$30,900

d

$31,680

e

$33,000

c. Refer to Figure 8. What is the flexible budget total variance for March?

a

$0

b

$1,200 F

c

$900 U

d

$1,100 F

e

$500 F

d. Refer to Figure 8. Which of the following describes the flexible budget variance for March?

a	The fixed cost variance is $100 F.

b	The variable cost variance is $1,000 U.

c	The variable cost variance is $1,100 F.

d	both a and b

e	both a and c