ohnson Electrical produces industrial ventilation fans. The company plans to manufacture 90,000 fans evenly over the next quarter at the following costs: direct material, $1,800,000; direct labor, $540,000; variable production overhead, $544,500; and fixed production overhead, $936,000. The $936,000 amount includes $93,000 of straight-line depreciation and $108,000 of supervisory salaries.

Shortly after the conclusion of the quarters first month, Johnson reported the following costs:

Direct material	$	537,100
Direct labor		169,400
Variable production overhead		187,000
Depreciation		31,000
Supervisory salaries		38,700
Other fixed production overhead		242,000
Total	$	1,205,200

Dave Kellerman and his crews turned out 26,000 fans during the montha remarkable feat given that the firms manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Johnsons general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job.

Required:

3. Prepare a performance report that compares flexible budget and actual costs for the period just ended (i.e., the report that the general manager likely used when assessing Kellermans performance)

4. Prepare a performance report that compares flexible budget and actual costs for the period just ended (i.e., the report that the general manager likely used when assessing Kellermans performance).

	Static Budget:	Actual:
	30,000 Units	26,000 Units	Variance
				Favorable
				Favorable
				Favorable
				Unfavorable
				Unfavorable
				None
Total	$0	$0		Favorable

	Flexible Budget:	Actual:
	26,000 Units	26,000 Units	Variance
				Favorable
				Unfavorable
				Unfavorable
				Unfavorable
				Unfavorable
				None
Total	$0	$0		Unfavorable