Question

Perez Medical Equipment Company makes a blood pressure measuring kit. Jason McCoy is the production manager. The production department’s static budget and actual results for 2019 follow: Static Budget Actual Results Production in units 21,000 kits 22,300 kits Direct materials $ 165,900 $ 213,670 Direct labor 144,900 148,070 Variable manufacturing overhead 31,500 35,650 Total variable costs 342,300 397,390 Fixed manufacturing overhead 213,000 208,000 Total manufacturing cost $ 555,300 $ 605,390 Required a. Convert the static budget into a flexible budget. b. Calculate the variances.

Convert the static budget into a flexible budget. (Do not round intermediate calculations.)

	Flexible Budget
Production in units	22,300	Kits
Direct materials
Direct labor
Variable manufacturing overhead
Total variable costs
Fixed manufacturing overhead
Total manufacturing costs

Calculate the variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

	Variances
Direct materials
Direct labor
Variable manufacturing overhead
Total variable costs
Fixed manufacturing overhead
Total manufacturing costs

Answer 1