How do I explain why Harlows revised figures could be considered deficient?

PORTER CORPORATION Performance Report for the Month of June, 2018 Total Actual Total Budgeted Costs Costs Variances $216,630 $237,600 Direct materials. ...... . . . . $20,970 F 119,340 132,000 Direct labor . . . ... 12,660 F 63,000 66,000 Variable overhead . . 3,000 F 184,000 184,000 Fixed overhead. ... $582,970 $619,600 $36,630 F In his presentation at Porter's month-end management meeting, Harlow indicated that things were going "fantastically." "The figures indicate," he said, "that the firm is beating its budget in all cost categories." This good news made everyone at the meeting happy and furthered Harlow's acceptance as a member of the management team. After the management meeting, Susan Jones, Porter's general manager, asked you, as an inde- pendern consultant, to review Harlow's report. Jones' concern stemmed from the fact that Porter has never operated as favorably as Harlow's report seems to imply, and she cannot explain the apparent significant improvement. While reviewing Harlow's report, you are provided the following cost and operating data for June: Porter has a monthly normal capacity of 11,000 direct labor hours or 8,800 units of product. Standard costs per unit for its only product are direct materials 3 pounds at $9 per pound; direct labor, 1.25 hours at $12 per hour; and variable overhead rate per direct labor hour of $6. During June, Porter produced 8,000 units of product, using 24,900 pounds of materials costing $8.70 each, 10,200 direct labor hours at an average rate of $11.70 each, and incurred variable overhead costs of $63,000 and fixed overhead costs of $184,000. After reviewing Porter's June cost data, you tell Harlow that his cost report contains a classic budgeting error, and you explain how he can remedy it. In response to your suggestion, Harlow revises his report as follows: Total Actual Total Budgeted Costs Costs Variances Direct materials. . $216,630 $216,000 $ 630 Direct labor . . . . . . . 119,340 120,000 660 F Variable overhead 63,000 60,000 3,000 U Fixed overhead. 184,000 184,000 $582,970 $580,000 $2,970 U Harlow's revised report is accompanied by remarks expressing regret at the oversight in the original report. So Mate Required Mate In your role as consultant, a. Verify that Harlow's actual cost figures are correct. Sol b. Identify and explain the classic budgeting error that Harlow apparently incorporated into his Labor Labor