Question

Ray Company provided the following excerpts from its Production Department's flexible budget performance report. (Round "rate per hour" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input all amounts as positive values.) Required: Complete the Production Department's Flexible Budget Performance Report. Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Flexible Results Spending Variances Budget 9,680 Activity Variances Planning Budget Labor hours (9) Direct labor $ 234,530 $ 232,3201 22.1401 Indirect labor 1.980 F 1650 U $ 8.500 46441 Ultes Suples E ment depreciation 400 0 None 0 None Factory administration + $ 1.90 Total expense

Answer 1

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)		9,680			9,680			9,200
Direct labor	$24 q	$234,530	$2,210	U	$232,320	$11,520	U	$220,800
Indirect labor	$7,620 + $1.5 q	20,180	1,960	F	22,140	720	U	($7,620+9,200*$1.5) 21,420
Utilities	($8,500 + 2.7 q)	36,286	1,650	U	34,636	1,296	U	33,340
Supplies	$1,740 + $0.3q	5,220	576	U	4,644	144	U	4,500
Equipment depreciation	$83,400	83,400	0	None	83,400	0	None	83,400
Factory administration	$19,100 + $1.90 q	36,132	1,360	F	37,492	912	U	36,580
Total expense		$415,748	$1,116	U	$414,632	$14,592	U	$400,040

Working notes:

Direct labor = $232,320 / 9,680 = $24q

Indirect labor = $22,140 - 9,680*$1.5 = $7,620 + $1.5q

Utilities = $8,500 + 2.7q (33,340-8,500 / 9,200)

Supplies (q) = $4,644 - 4,500 / 9,680 - 9,200

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

Supplies = $4,644 - (9,680*$0.3) = $1,740

Supplies = $1,740 + $0.3q