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Walmart. uses budgets in an effort to control costs. The June 2016 budget report for the companys manufacturing operations is as follows: Walmart Budget Report

Walmart. uses budgets in an effort to control costs. The June 2016 budget report for the companys manufacturing operations is as follows:

Walmart

Budget Report

Manufacturing Operations

For the Month Ended June 30, 2016

Manufacturing Costs

Budget

Actual

Difference

Favorable (F)

Unfavorable (U)

Variable costs

Direct materials

$ 96,000

$ 94,000

$ 2,000

F

Direct labor

108,000

102,000

6,000

F

Indirect materials

48,000

49,000

1,000

U

Indirect labor

36,000

38,000

2,000

U

Repairs

12,000

13,000

1,000

U

Utilities

30,000

28,000

2,000

F

Total variable costs

330,000

324,000

6,000

F

Fixed costs

Rent

24,000

24,000

0

Supervisor salary

34,000

34,000

0

Depreciation

12,000

12,000

0

Total fixed costs

70,000

70,000

0

Total costs

400,000

394,000

6,000

F

The monthly budget was based on production of 120,000 units per month (1,440,000 units per year). The manufacturing manager is proud of the fact that the report reflected a favorable variance and expects that he will be rewarded for spending less than budget. The controller of the company was not happy with the June results because there were only 115,000 units produced.

Prepare a performance report for June that includes a flexible budget.

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