Question

# Flexible Budget for Varying Levels of Activity Nashler Company has the following budgeted variable costs per...

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 160,000 units and had the following actual costs:

 Direct materials \$1,148,000 Direct labor 252,900 Supplies 37,300 Maintenance 30,340 Power 28,730 Supervision 99,400 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 \$1,152,000? 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 \$.

[1]

 Nashler Company Performance Report Actual Cost Flexible Budget Cost Variance Direct materials \$1,148,000 \$1,152,000 \$4,000 Favourable Direct labor \$252,900 \$246,400 \$6,500 Unfavourable Supplies \$37,300 \$36,800 \$500 Unfavourable Maintenance \$30,340 \$30,400 \$60 Favourable Power \$28,730 \$28,800 \$70 Favourable Supervision \$99,400 \$98,000 \$1,400 Unfavourable Depreciation \$76,000 \$76,000 \$0 NA Other overhead \$244,300 \$245,000 \$700 Favourable Total cost \$1,916,970 \$1,913,400 \$3,570 Unfavourable

[2]

Total Material Variance would be \$ 0 [1152000 - 1152000]
Total Cost Variance would Increase by \$ 4,000

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