Wartburg College

HMWK #$16-2$

AC$323-$ Cost Acct

Calc: D$/$L Static Budget Var. and Flexible Budget Var.

Chapter $16-$ Variance Analysis

Then analyze the Unfavorable Flexible Budget Variance

AISO MAKE SURE TO GVV POSSIBLE EXPLANANTIONS II$28$ #$4$

Peacock Company planned to make $100$ skateboards. The DL cost was budgeted at $$2000,$ which was based on $2$ Standard Hours DL per unit e a $$10/$Hour pay rate.

Peacock Compary actually produced only $90$ skateboards. DL cost totaled $$1881.$

Calculale the Static Budget Varlance and the Flexible Budget Variance.

Give some possible explanations for the unfaworable flexible$-$budget variance

Peacock Company's Controller said we need to understand why we had an unfavorable Flexible$-$Budget Variance. The staff accountant provided the following additional information:

Actual labor time to produce each of the ficateboards averaged $1$ hour and $54$ minutes. The actual pay rate was $$11\mathrm{.}00$ per hour. Using this data, analye the Flexible$-$budget Varlance between Price and Efficiency Variances.

Based on this improved analysis, give more likely explanations for the two variances $($price and efficiency$).$