Performance Analysis Report Table I: Budgeted and Actual costs along with performance analysis. Units 18,000 14,000 4,000 Sales Variable Tk864,000 Tk686,000 Tk178,000 U manufacture ring costs: Direct material TK108,000 TK 85,400 TK 22,600 F Direct labor 288,000 246,000 42,000 F Indirect labor 57,600 44,400 13,200 F Idle time 14,400 14,200 200 F Cleanup time 10,800 10,000 800 F Miscellaneous supplies 5,200 4,000 1,200 F Total variable manufacturing cost TK484,000 TK404,000 TK 80,000 F Variable shipping costs TK 28,800 TK 28,000 TK 800 F Total variable costs TK512,800 TK432,000 TK 80,800 F Contribution margin Non variable TK351,200 TK254,000 TK 97,200 U manufacturing costs: Supervision TK 57,600 TK 58,800 TK 1,200 U Rent 20,000 20,000 -- Depreciation 60,000 60,000 -- Other 10,400 10,400 -- Total non-variable manufacturing costs TK148,000 TK149,200 TK 1,200 U Selling and administrative costs 112,000 112,000 -- Total non-variable and programmed costs TK260,000 TK261,200 TK 1,200 U Operating income (loss) 91,200 (7,200) (98,400) U Farr Ceramics Production Division: A Budgetary Analysis A look at the performance report affirmed Rahman's most exceedingly awful feelings. Rather than a planned profit of Tk 91,200, the report demonstrated the division made a loss of Tk7,200 in May. Taking into consideration the declining order, he considered an improved trend than demonstrated by the performance report. The factory accountant had connected the accompanying notice to the report

QUESTIONS 1. Use the budget data to calculate the per-unit fixed and variable cost allocated to production. What was the actual cost per unit of production and shipping? 2. Draft a flexible budget based on the data provided. 3. Prepare a flexible budget performance report. 4.The factory accountants performance analysis report has been presented to Mr. Rahman. Using Table I, comment on the findings. Suggest areas of improvement before it is sent to the head office of FARR ceramics that the manager may like to be reflected in this analysis. (Hints: it might be useful to look into the material price and quantity variances and labor rate and efficiency variances) 5. What is the implication on non-variable manufacturing cost if the decline in order by Rosenthal continues? Prepare a sensitivity analysis considering the declining order trend and suggest FARR Ceramics possible ways of improving their current performance