PR 11-39 (Algo) Budgets and Performance Evaluation (LO 11-1, 11-6) Johnson Electrical produces industrial ventiation fans. The company plans to manufacture 72,000 fans evenly over the next quarter at the following costs: direct material, $1,872,000; direct labor, $288,000; variable production overheod, $4,44,400; and fined production overt: Shorty after the conclusion of the quarter's first month, Johnson reported the following costs. Dave Kellerman and his crews turned out 20,000 fans during the month-a temarkabie feat given that the fim's manufacturing plant was closed for several days because of storm damage and flooding Kellerman was especialy pleased with the fact that overall financial performance for the period was fovorable when compared with the budget. Ho pleasute, however, was very short-ived, as Johnson's general manager issued a stem warning that flerformance must improve, and improve quickly, if Keiterman fud any hopes of keeping his job. Required: Required: 1. Explain the difference between a statc budget and a flexble budget. 2. Which of the two budgets would be more useful when planning the compary/s cash needs over a range of activity? 3. Prepare a performance report that compares static budget and actual costs for the period just ended p.e, the report that Kellerman likely used when assessing his performance). 4. Prepare a performance report that compares fexible budget and actual costs for the period just ended (i.e, the report thet the general manager likely used when assessing Kellerman's performance? 5.a. Which of the following two reports is preferred? 5-b. Which of the following statements is talse? Answer is complete but not entirely correct. Complete this question by catcring your angwars in the tabs below: Prepare a performance report that compares static budget and actual costs for the period just ended (i.e., the report that Kelierman likely used when assessing his performance). Note: Indicate the effect of each variance by selecting "Favorable" or "Unfavorable", Select "None" and enter " 0 " for no effec (i.e., zero variance). Do not round intermediate calculations. 5-b. Which of the followng strements is rase? Answer is complete but not entirely correct. Prepare a performance report that compares Fexible budget and actual costs for the period just ended (1.e., the report that Prepare a performance report that compares Rexible buoget and actual costs fc the general manager likely used when assessing Kellerman's performance). (b.e, zero variance). Do not round intermediate calculations. show lnsta
