Question

Flexible Budget for Varying Levels of Activity

Nashler Company has the following budgeted variable costs per unit produced:

Direct materials	$7.20
Direct labor	1.54
Variable overhead:
Supplies	0.23
Maintenance	0.19
Power	0.18

Budgeted fixed overhead costs per month include supervision of $98,000, depreciation of $76,000, and other overhead of $245,000.

In March, Nashler Company produced 170,000 units and had the following actual costs:

Direct materials	$1,220,000
Direct labor	268,300
Supplies	39,600
Maintenance	32,240
Power	30,520
Supervision	99,500
Depreciation	76,000
Other overhead	244,300

Required:

1. Prepare a performance report for Nashler Company comparing actual costs with the flexible budget for actual units produced. If there is no variance, enter "0" for the amount and select "NA" in the last column.

Nashler Company Performance Report
	Actual Cost	Flexible Budget Cost	Variance
Direct materials	$	$	$
Direct labor
Supplies
Maintenance
Power
Supervision
Depreciation
Other overhead
Total cost	$	$	$

2. What if Nashler Company’s actual direct materials cost were $1,224,000? How would that affect the variance for direct materials? If an amount is zero, enter "0".
The materials variance would be $.

The total cost variance would   by $.

Answer 1