Question 1

You have recently been hired by Closure Company, which produces windows for personal homes. Based on the following information prepare a flexible budget for 3000, 3500 and 4000 units.

Direct Materials per Unit: $15.00

Direct Labor per Unit: $20.00

Variable Overhead Cost per Unit: $5.00

Fixed Overhead: $50,000 per year

Question 2

Based on the flexible budget from scenario 1, prepare a performance report if the company has the following actual costs for 3,500 units this month:

Actual production was 3,500 units.

Actual Direct Materials were $53,000

Actual Direct Labor costs were $69,500

Actual Variable Overhead costs were $18,000

Actual Fixed Overhead costs were $50,000

Question 3

Pull Company has the following information for the month. Compute the Variable Overhead Spending Variance, Variable Overhead Efficiency Variance and the Total Variable Overhead Variance based on the following information:

Standard Variable Overhead rate: $5.00 per Direct Labor Hour

Actual Variable Overhead Costs: $9,000

Standard hours allowed per unit: .50 hours

Actual direct labor hours worked: 1,700 hours

Units produced: 3,500