Question 9 Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2020. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours. Rate per Direct Labor Hour Variable costs Annual Fixed Costs $0.40 0.50 Indirect labor Indirect materials Factory utilities Factory repairs Supervision Depreciation Insurance $48,000 18,000 12,000 30,000 0.30 0.20 Rent The master overhead budget was prepared on the expectation that 480,000 direct labor hours will be worked during the year. In June, 41,000 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variable-per direct labor hour: indirect labor $0.44, indirect materials $0.48, factory utilities $0.32, and factory repairs $0.25. Fixed: same as budgeted. ZELMER COMPANY Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2020 Difference Favorable Budget Actual Costs Unfavorable U Direct labor hours (DLH) 41,000 DLH 41,000 DLH Variable costs Indirect labor $16,400 $18,040 $1,640 U Indirect materials 20,500 19,680 820 F Factory utilities 12,300 13,120 820 U Factory repairs 8,200 10,250 2,050 U Total variable costs 57,400 61,090 3,690 U Fixed costs Supervision 4,000 4,000 0 Depreciation 1,500 1,500 0 Insurance 1,000 1,000 0 Rent 2,500 2,500 0 Total fixed costs 9,000 9,000 0 Total costs $66,400 $70,090 $3,690 U Were costs effectively controlled? Explain