Question

Ray Company provided the following excerpts from its Production Department’s flexible budget performance report.

Required:
Complete the Production Department’s Flexible Budget Performance Report. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round "rate per hour" answers to 2 decimal places.)

Ray Company
Production Department Flexible Budget Performance Report
For the Month Ended August 31
						Actual Results	Spending Variances		Flexible Budget	Activity Variances		Planning Budget
Labor-hours (q)						9,560						9,080
Direct labor	(		q)			$174,170			$172,080
Indirect labor	(		+	$1.70	q)		1,108	F	23,752
Utilities	(	$7,300	+		q)		1,530	U		720	U	20,920
Supplies	(		+		q)	5,052			4,524			4,380
Equipment depreciation	(	$80,400	)				0	None		0	None
Factory administration	(	$18,860	+	$1.70	q)
Total expense						$339,328

Answer 1

		Actual results	Spending variance		Flexible budget	Activity variance		Planning budget
Labor hours (q)		9560			9560			9080
Direct labor	18q	174170	2090	U	172080	8640	U	163440
Indirect labor	$7500 + $1.70 q	22644	1108	F	23752	816	U	22936
Utilities	($7300+ 1.50q)	23170	1530	U	21640	720	U	20920
Supplies	$1,656 + $0.3q	5052	528	U	4524	144	U	4380
Equipment depreciation	80400	80400	0	None	80400	0	None	80400
Factory administration	$18860 + $1.70 q	33892	1220	F	35112	816	U	34296
Total expense		339328	1820	U	337508	11136	U	326372

Working notes:

Direct labor = $172,080 / 9,560 = $18q

Indirect labor = $23752 - 9,560 * $1.70 = $7500 + $1.70q

Utilities = $7300 + 1.50q [20920 - 7300) / 9,080]

Supplies (q) = ($4,524 - 4380) / (9,560 - 9,080)

Supplies (q) = $144/480 = $0.3q

Supplies = $4,524 - (9,560*$0.3) = $1656

Supplies = $1,656 + $0.3q