Problem:
Company A produces fans. Company A plans to manufacture 72,000 evenly over the next quarter at the following costs:
direct materials 1,440,000
direct labor 360,000
variable mfg costs 450,000 and
fixed overhead 900,000.
The last amount includes 72,000 of straight-line depreciation and 108,000 of supervisor salaries.
Shortly after the quarters first month Company A reported:
Direct materials 432,500
dierct labor 110,600
variable mfg costs 152,000
depreciation 24,000
supervisory salary 37,800
other fixed mfg overhead 239,000
total 995,900
The work crew produced 20,000 fans in the first month
Required:
1. The crew supervisor needs to prepare a performance report that compares budgeted and actual cost for the period just ended (will produce a favorable result)
2.
The CFO needs to prepare a performance report that compares budgeted and actual cost for the period just ended (will produce an unfavorable result).
The CFO and the supervisor used different performance report calculations and ended with differing results.