Question

Gleason Guitars produces acoustic guitars. The table below contains budget and actual information for the month of June (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance).) onts Actual Costs 305 units Spending Variance Flexible Budget 305 units Volume Variance Master Budget 200 units $ Direct Material Direct Labor Variable Overhead Fixed Overhead Total Manufacturing Costs 16,3001 27.000 9,050 12.300 64. 6501 14,800 22,800 8,800 11.400 57 800

Answer 1

Ans.	Flexible Budget Performance Report
		Actual Costs	Spending variance		Flexible Budget	Activity variance		Planning Budget
	Direct Materials	$16,300	$6,270	F	$22,570	$7,770	U	$14,800
	Direct Labor	$27,000	$7,770	F	$34,770	$11,970	U	$22,800
	Variable Overhead	$9,050	$4,370	F	$13,420	$4,620	U	$8,800
	Fixed overhead	$12,300	$900	U	$11,400	$0	none	$11,400
	Total manufacturing costs	$64,650	$17,510	F	$82,160	$24,360	U	$57,800
	*Flexible budget is prepared on the basis of actual units.
	*Fixed expenses remain same as static budget.
	*Calculations for variable costs in Flexible budget:
	Flexible budget variable costs = Planning budget variable costs / Planned units * Actual units
	Direct Materials	$14,800 / 200 * 305
	Direct Labor	$22,800 / 200 * 305
	Variable Overhead	$8,800 / 200 * 305
	Spending variance   =   Actual results - Flexible budget
	Activity variance =   Flexible budget - Planning budget
	*Increase in expenses from flexible budget to actual results & Planning budget to flexible budget =   Unfavorable.
	*Decrease in expenses from flexible budget to actual results & Planning budget to flexible budget =   Favorable.