Klamaty, Inc., is looking for feedback on performance. The company compares the budget for the year with the actual costs.

Klamaty, Inc., had the following budgeted data:

Unit sales for 2011 10,000 Unit production for 2011 10,000 Budgeted fixed overhead for 2011: Supervision $18,000 Depreciation 20,000 Rent 10,000 Budgeted variable costs per unit: Direct materials $18.00 Direct labor 25.00 Supplies 0.20 Indirect labor 1.00 Power 0.10 The following actually occurred: Actual unit sales for 2011 11,000 Actual unit production for 2011 12,000

Actual fixed overhead for 2011: Supervision $17,850 Depreciation 20,000 Rent 10,000 Actual variable costs for 2011: Direct materials $214,000 Direct labor 320,000 Supplies 2,500 Indirect labor 10,000 Power 1,500

Required: A. Prepare a static (master) budget for all costs of production. B. Prepare a flexible budget for all costs of production for the actual level of production. C. Compute the Static Budget Variances D. Compute the Flexible Budget Variances.