Hill Bikes Unlimited uses a flexible budget and standard costs to aid planning and control of its bicycle production. You recently accepted a position with Hill Bikes and as part of your duties, you must review the variances and make a presentation to the company's executive committee (which is not made up of trained accountants).

As in the real world, sometimes things happen. Assume that the material you prepared was placed on top of some papers going into the shredder. After you realize your mistake, you rush into the shredding room to find that some of your pages and data have been shredded. This is all that is left:

Standard or budgeted costs and quantities:

Direct materials 2.0 meters of aluminum at $16 per meter

Direct labor 2 hours at $15 per hour

Variable OH Based on DL hrs, the standard or budgeted VOH rate is $9

Fixed OH Based on DL hrs, the standard or budgeted FOH rate is $23

Total Costs allowed for the actual quantity of output (flexible budget)

Direct Materials $608,000

Direct Labor $570,000

Variable OH $342,000

Variances Price (or spending) variance Efficiency variance

Direct Materials $25,000 Fav $ 32,000 Unfav

Direct Labor $30,000 Unf $30,000 Unfav

Variable OH $8,000 Fav ????

Fixed OH $6,000 Fav ????

Direct Materials price var per meter = $0.50 Fav

The Budgeted quantity of bikes is 20,000 units.

Given that you presentation is coming up soon, prepare a variance analysis using the 4-way chart / table (see attached template). Be sure to complete all totals along with the variances clearly marked as unfav or fav.

Actual Flexible Budget OH Applied (This column only for OH) Dir Mat (AQI X AP) (AQI X BP) (AQI X BP) [(AQo x BQ1) x BP] ( ) ) Dir Lab (AQX AP) (AQ1 x BP) [(AQO x BQI) X BP] ( ) VOH (AQI X AP) Actual (AQI X BP) [(AQO x BQ1) X BP] Applied [(AQO x BQ:) x BP] Q = how we "apply' OH FOH Actual Master Budget Flexible Budget Applied [(AQO X BQ1) X BP] Q = how we "apply' OH