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.

Variable costs		Rate per Direct Labor Hour		Annual Fixed Costs
Indirect labor		$0.40		Supervision		$48,000
Indirect materials		0.50		Depreciation		18,000
Factory utilities		0.30		Insurance		12,000
Factory repairs		0.20		Rent		30,000

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. Variableper 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
		Budget		Actual Costs		Favorable F 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

1-Were costs effectively controlled? Explain.

2-Prepare the flexible budget graph, showing total budgeted costs at 35,000 and 45,000 direct labor hours. Use increments of 5,000 direct labor hours on the horizontal axis and increments of $10,000 on the vertical axis.