Mu Technologies

Scenario: Prepare Budget and Control Costs

Data:

• Budgeted Costs:
  • Direct Materials: $70,000
  • Direct Labor: $40,000
  • Factory Overhead: $30,000

• Actual Costs:
  • Direct Materials: $72,000
  • Direct Labor: $42,000
  • Factory Overhead: $28,000

Requirements:

1. Prepare a flexible budget based on actual production and costs.
2. Calculate the variances for Direct Materials, Direct Labor, and Factory Overhead.
3. Analyze the variances and identify potential causes.
4. Discuss strategies to improve cost efficiency and budget adherence at Mu Technologies.
5. Evaluate the effectiveness of the budgeting process and recommend improvements.