I need help with problem 8-26. using the template provided.

calculate the flexible variance.) 8-26. Justice Township tries to keep tight con- of the municipal court trol over the costs system. Since the town is small, its courts operate only a few days a week, and they get by largely with part-time workers Last month it was expected that court ste- nographers would cost $25,00o, but they actually cost $30,0oo, which is 20 per- cent more than the budgeted amount. The municipal judge has argued that the bench heard many more cases than expected, and this caused the increase. The director of the town's budget office feels that a 20 percent variance is unreasonable. As an analyst for the budget office, you have been asked to explain the variance. Your investigatiorn shows that it was expected that there would be 125 trials, stenographers would be paid $20 per hour, and each trial would take an average of 10 hours. Actually, there were 150 trials, lasting 8 hours each, on aver- age, and stenographers earned $25 per hour. Calculate the volume, quantity, and rate variances, and provide some possible explanations for each Felicia DeWitt Share Budgeted Volume x Budgeted Quantity x Budgeted Rate Actual VolumeBudgeted Quantity Budgeted Rate 10 Flex Budget 11 or 222x10 #VALUE! X22VALUE! Variance #VALUE! u Budgeted Quantityx Actual 6 Flex Budget Actual Velume Actual Volume Quantity x Budgeted Rate VQA Badget 8 or x$20 150 2227$20VALUE! VQA Budget 24 Actual 25 or Actual Volume x Actual Quantity Actual Rate r #VALUE, 150 9222 Price VarianceVALUE!U _r_ 150 150 8 2 2 #VALUE! #VALUE! #VALUE! 27 ??2? Price V 311 Investigation of why there were 20% more trials is required. The $5,000 Unfavorable Vohme 32 Variance might reflect an increased amount of crime, or simply greater efficiency of the Courts in 33 providing a speedy trial. The Judge is correct in arguing that more cases tend to raise costs, 34 other things being equal. However, everything else did not stay the same. The trials have become 35 shorter resulting in a Favorable Quantity Variance of $6,000. Shorter trials require less labor hours 36 This could reflect greater efficiency, or simply a mix of cases that tend to be shorter. If it is the result 37 of efficiency, that improvement should be noted and rewarded to encourage its continuation. In any 38 case, the shorter trials more than made up for the increased number of trials. The Unfavorable Rate 39 Variance caused spending of $6,000 over the expected level. One might argue that the additional 40 volume of cases required overtime, accounting for the higher wage. However, because the trials 41 were shorter we actually used only 2,400 labor hours as compared to the 2,500 budgeted. The 42 variance could be due to a new union contract, or perhaps we hired stenographers with more experience 43 who earn a higher wage. Perhaps there was a payroll error, and the stenographers were paid at the 44 wrong hourly wage. In any event, investigation of this rate variance is clearly warranted. 2 45 48 49 51 52 8-26 8-27 8-28 8-29 8-30 Type here to search