Question

In setting up the master budget for the first quarter of the year, Cool-U expected to produce 1,060 t-shirts. When the quarter had ended, Cool-U found that it had actually produced 1,200 t-shirts. The following information are available for the first quarter.

Data from Master Budget                                     Actual Data for Quarter

Budgeted production for                                         Production                 1,200units

Quarter 1:      1,060

Materials:                                                                   Materials costs          £4,830

1 Plain t-shirt @ £3.00

5 Ounces of ink @ £0.20

Labour: 0.12hrs @ £10.00                                       Labour costs              £1,500

Variable Overhead:                                                           Variable overhead:

Maintenance 0.12hr@ £3.75                                   Maintenance cost      £535

Power             0.12hr @£1.25                                   Power cost                 £170

Fixed Overhead                                                      Fixed Overhead

Ground keeping        £1,200 per quarter               Grounds keeping       £1,050

Depreciation             £600 per quarter                  Depreciation              £600

Required

Prepare a performance report using the static budget (that is, based on the expected production of 1,060 t-shirts), and flexible budget for 1,200 t-shirts.

Answer 1

COOL-U
Budget Performance Report
For the First Quarter
	Actual Results	Revenue and Spending Variances		Flexible Budget	Activity Variances		Master Budget
Production (units)	1200			1200			1060
Materials:	4830	30	U	4800	560	U	4240
Labor:	1500	60	U	1440	168	U	1272
Variable overhead:
Maintenance	535	5	F	540	63	U	477
Power	170	10	F	180	21	U	159
Fixed overhead:
Ground keeping	1050	150	F	1200	0	None	1200
Depreciation	600	0	None	600	0	None	600
Total	8685	75	F	8760	812	U	7948