Question 1:

Question 1 Ronal Davis, superintendent of Mason Company Milling Department, is very happy with his performance report for the past month. The report follows: Mason Company Overhead Performance Report - Milling Department Actual Budget Variance Machine-hours 30,000 35,000 Variable manufacturing overhead ndirect labour 19,700 21,000 1,300 Utilties 50.80 59.500 8,700 Supplies 12,600 14,000 1,400 F Maintenance 24,900 28,000 3,100 F Total variable manufacturing overhead 108,000 22,500 14,500 F Fixed manufacturing overhead Maintenance 52,000 52,00 Supervision 1 10,000 1 10,000 Depreciation 80,000 80,000 Total fixed manufacturing overhead 242,000 242,000 0 Total manufacturing overhead $50,000 364,500 14,500 F Upon receiving a copy of the report, John Arnold, the production manager, commented, "I've been getting these reports for months now, and I still can't see how they help me assess efficiency and cost control in that department. I assume that the static budget for the month was 35,000 machine-hours, but the standard machine hours should only be 2 MH per unit. Even though the actual machine hours were 30,000 MHs, the department produced only 14,000 units during the month, and there is no information for costs related to standard machine hours. Why do all the variances turn up favourable? What I need is a flexible budget. Required: Use the Excel answer sheet provided Prepare a new overhead performance report that will help Mr. Arnold assess efficiency and cost control in the milling department. Your report should account for the following: a) The budgeted variable cost per machine hour. b) The flexible budget based on 30,000 MHs. c) The flexible budget based on the standard machine hours allowed. d) The total variance, spending variance and efficiency variance. Source: Ray H. Garrison, G.R. Chesley, and Raymond F. Carroll, Managerial Accounting, Eighth Canadian Edition. Toronto: McGraw-Hill Ryerson Limited, 2010. 480-481. Introductory Management AccountingQuestion 1 Mason Company Performance Report - Milling Department Static budgeted machine-hours 35,000 Actual machine-machine hours 30,000 Standard machine-hours allowed: 1) Actual units produced 2) Machine-hours per unit Standard machine-hours Flexible Budget Variances Cost Actual formula per costs Static 30,000 Standard Total Spending Budget MHs MHS vanance U/F vanance U/F Efficiency U/F Overhead costs MH incurred vanance Variable costs: Indirect labour $ 0.60 $ 19,700 $ 21,000 $ (19,700) $ (19,700) Utilities Supplies Maintenance Total variable cost $ 0.60 $ 19,700 $ 21,000 $ $ $ (19,700) $ (19,700) $ Fixed costs: Maintenance Supervision Depreciation Total fixed cost $ $ - $ Total overhead costs $ 19,700 $ 21,000 $ $ $ (19,700)