Paradigm Toys

Flexible Budget Performance Report

BudgetActualDifference

Favorable (F)

Unfavorable (U)Production in units18,00018,000Direct laborDirect labor hours (1 hour/unit)18,00018,200200 (U)Direct labor costs ($20/hour)$360,000$354,900$5,100 (F)Direct MaterialsQuantity (.5/unit)9,0009,300300 (U)Dollars ($20/unit)$360,000$375,000$15,000 (U)Variable costsIndirect materials720,000700,00020,000 (F)Indirect labor324,000288,00036,000 (F)Utilities198,000176,00022,000 (F)Total variable costs1,242,0001,164,00078,000 (F)Fixed costsDepreciation300,000300,0000Property taxes50,00050,0000Supervision120,000120,0000Total fixed costs470,000470,0000Total costs1,712,0001,634,00078,000 (F)

What is an explanation for the change in direct materials costs?