Sundazzler Designs has prepared the annual manufacturing budget for its line of specialty pergolas. It estimated annual production of 3,000 pergolas during 2022. Each pergola will require 54 pounds of lumber and a metal kit (attachments and decorative embellishments.). The lumber used in these pergolas costs $1.50 per pound, and the metal kits cost $170 each. Each pergola will use two kinds of labor—2 hours of type I labor from people who run the cutting saws and finishing tools, and 3 hours of work from type II workers who attach the metal reinforcements and other hardware. The type I employees are paid $15 per hour, and the type II are paid $12 per hour.

These are ANNUAL amounts

Manufacturing overhead is budgeted at $340,550 for the year 2022, broken down as follows.

Variable costs
Indirect materials	$30,000
Manufacturing supplies	40,350
Maintenance and utilities	66,000
Total variable MOH:	136,350
Fixed costs
Supervision	80,000
Insurance	14,400
Depreciation	109,800
Total fixed MOH:	204,200
Total	$340,550

These are quarterly amounts

During the first quarter, ended March 31, 2022, 1,050 units were actually produced with the following costs.

Lumber	$87,000
Metal kits	178,840
Type I labor	31,500
Type II labor	39,060
Indirect materials	11,200
Manufacturing supplies	14,150
Maintenance and utilities	22,500
Supervision	25,000
Insurance	3,600
Depreciation	27,450
Total	$440,300

Required:

1. Prepare the annual manufacturing budget for 2022, assuming that 3,000 pergolas will be produced. Use the Excel template provided in the other attached file.
2. Peak sales occur during the summer months, so management expects production to be highest in the first quarter of the year. Prepare the flexible budget for manufacturing for the quarter ended March 31, 2022, assuming that production is a) 950 units, b) 1,050 units and c) 1,200 units. (Note: You have to prepare a separate budget for each level of activity. See sheet 2 on the Excel template).
3. Assuming that the pergola line is treated as a cost center, prepare a flexible budget report for manufacturing for the quarter ended March 31, 2022, when 1,050 units were produced. (Round all budgeted amounts to the nearest dollar.)
4. Prepare a brief report about how well management contained costs for the quarter.

5. The accounting manager reviewed the cost reports and noted the following actual costs for a particular order that consisted of 20 pergolas:

*1,200 pounds of lumber were purchased at a total cost of $2,040.

*Twenty (20) metal kits were assembled at a total cost of $3,240.

*Type I employees worked 38 hours on this project at a total cost of $570.

*Type II finishing employees worked 65 hours at a total cost of $796.25.

The following are the standard costs that were developed for this project. Each
finished item should have used:

1. 54 pounds of lumber at $1.50 per pound
2. 1 metal kit at $170
3. 2 hours of type I labor from people who run the oven and trim the plastic at a standard wage rate of $15 per hour
4. 3 hours of type II labor from people who attach the hatches and seat and other hardware at a standard wage rate of $12 per hour.

Calculate the 1) price variance ((AQ X AP) –(AQ X SP)) and 2) quantity variance ((AQ x SP)- (SQ X SP)) for each item and explain what could cause the variance for each item.

1. Lumber
2. Metal kits.
3. Type I workers.
4. Type II workers
5.  

Costs: Variable costs Lumber Metal kits Labor-type I Labor-type II Indirect materials Manufacturing supplies Maintenance and utilities Total variable costs Fixed costs Supervision Insurance Pergola Division Manufacturing Budget for the year 2022 Depreciation Total fixed costs Total costs