The Master (Static) budget for Jack Daniels Inc. is presented below. For June, Jack Daniels Inc. manufactured and sold 920 units for $835. During this month the company incurred $460,000 total variable expenses and $180,000 total fixed expenses. 

1. Required 
   1. Prepare a flexible budget performance report for June including all variances.

 

          Master (Static) Budget

            

Units	1,000
Sales	$800,000
Variable costs	450,000
Contribution margin	$350,000
Fixed costs	150,000
Operating income	$200,000

 

 

2. Jack Daniels Inc. used 3,450 pounds of aluminum in June to manufacture 920 units. The company paid $28.50 per pound during the month to purchase aluminum. On June 1, the company had 50 pounds of aluminum on hand. At the end of June, the company had only 30 pounds of aluminum in its warehouse. Daniels used 4,340 direct labor hours in June, at an average cost of $41.50 per hour.  The standard for aluminum is 4 pounds per unit at a standard cost of $25.00 per pound. The standard for direct labor is 5 hours per unit at a standard rate of $40 per hour. 
   1. Compute for June, Jack Daniels Inc. 
      1. Purchase price variance for aluminum
       
      2. Direct labor rate and efficiency variance
    
   2. Daniels deployed new strategies for both aluminum and labor. For aluminum and labor they invested in better inputs. Did management make good decisions?