PR 11-39 (Algo) Budgets and Performance Evaluation (LO 11-1, 11-6) Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 72,000 fans evenly over the next quarter at the following costs. direct material, $1,872,000; direct labot, $288,000; variable production overhead, $464,400, and fixed production overhead, $972,000. The $972.000 amount includes $90,000 of straight-line depreciation and $114,000 of supervisory salaries: Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: Dove Kellerman and his crews turned out 20,000 fans during the month-a remarkable feat given that the firm's manufocturing plant was closed for several days because of storm domoge and flooding Kellerman was especially pleased with the foct that overall financial performance for the period was favorable when compared with the budget His pleasure, however, was very short lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quichly, if Kellerman had any hopes of keeping his job Required: 1. Explain the difference between a static budget and o flexible budget 2. Which of the two budgets would be more useful when planning the companys cash needs over a range of activity? 3. Ptepare a performance report that compares static budget and actual costs for the period just ended fe, the report that Kellerman likely used when assessing his performance) 4. Prepare o performance report that compores floxible budget and actual costs for the period just ended ie, the report that the general manager likely used when assessing Kellerman's performance) 5-e. Which of the following two reports is preferred? 5-b. Wivich of the following statements is folse? Complete this question by entering your answers in the tabs below. Prepare a performance report that compares static budget and actual costs for the period just ended (1.e, the report that Kellerman likely used when assessing his performance). Note: Indicate the effect of each variance by selecting "Fovorable" or "Unfavorable". Select "None" and enter " 0 " for no effect (C.e., zero variance). Do not round intermediate calculations. Complete this question by entering your answers in the tabs below. 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 Kellerman's performance). Note: Indicate the effect of each variance by selecting "Favorable" or "Uniavorable". Select "None" and enter " O " for no effect (i.e., zero variance). Do not round intermediate calculations. PR 11-39 (Algo) Budgets and Performance Evaluation (LO 11-1, 11-6) Johnson Electrical produces industrial ventilation fans. The company plans to manufacture 72,000 fans evenly over the next quarter at the following costs. direct material, $1,872,000; direct labot, $288,000; variable production overhead, $464,400, and fixed production overhead, $972,000. The $972.000 amount includes $90,000 of straight-line depreciation and $114,000 of supervisory salaries: Shortly after the conclusion of the quarter's first month, Johnson reported the following costs: Dove Kellerman and his crews turned out 20,000 fans during the month-a remarkable feat given that the firm's manufocturing plant was closed for several days because of storm domoge and flooding Kellerman was especially pleased with the foct that overall financial performance for the period was favorable when compared with the budget His pleasure, however, was very short lived, as Johnson's general manager issued a stern warning that performance must improve, and improve quichly, if Kellerman had any hopes of keeping his job Required: 1. Explain the difference between a static budget and o flexible budget 2. Which of the two budgets would be more useful when planning the companys cash needs over a range of activity? 3. Ptepare a performance report that compares static budget and actual costs for the period just ended fe, the report that Kellerman likely used when assessing his performance) 4. Prepare o performance report that compores floxible budget and actual costs for the period just ended ie, the report that the general manager likely used when assessing Kellerman's performance) 5-e. Which of the following two reports is preferred? 5-b. Wivich of the following statements is folse? Complete this question by entering your answers in the tabs below. Prepare a performance report that compares static budget and actual costs for the period just ended (1.e, the report that Kellerman likely used when assessing his performance). Note: Indicate the effect of each variance by selecting "Fovorable" or "Unfavorable". Select "None" and enter " 0 " for no effect (C.e., zero variance). Do not round intermediate calculations. Complete this question by entering your answers in the tabs below. 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 Kellerman's performance). Note: Indicate the effect of each variance by selecting "Favorable" or "Uniavorable". Select "None" and enter " O " for no effect (i.e., zero variance). Do not round intermediate calculations
