Question

Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 Actual Spending Variances Flexible Results Budget 9,590 Planning Activity Variances Labor-hours (9) 9,110 Direct labor $ 190,125 $ $ 187,005 18,079 Indirect labor $ $ 3,394 F 1,560 U Utilities $ 7,600 + $ 864 U g) 9) $ $ 23.998 4,410 Supplies ( $ + $ 5,094 4,554 Equipment depreciation 150 $ 0 None $ 0 None Factory administration 18.920 Total expense $ 344,736

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)		9590			9590			9110
Direct labor	($19.50q)	$190125	(190125-187005)= 3120	U	$187005	(187005-177645)= 9360	U	$177645
Indirect labor	($7530+$1.10q)	$14685	$3394	F	$18079	(18079-17551)= 528	U	$17551
Utilities	($7600+$1.80q)	$26422	$1560	U	$24862	$864	U	$23998
Supplies	($1677+$0.30q)	$5094	(5094-4554)= 540	U	$4554	(4554-4410)= 144	U	$4410
Equipment depreciation	($81150)	$81150	0	NONE	$81150	0	NONE	$81150
Factory administration	($18920+$1.00q)	$27260	(27260-28510)= 1250	F	$28510	(28510-28030)= 480	U	$28030
Total expenses		$344736	$576	U	$344160	$11376	U	$332784

Direct labor per unit= $187005/9590= $19.50

Direct labor of Planning Budget= 9110*$19.5= $177645

Fixed costs of indirect labor

($18079-X)/1.10= 9590

$18079-X= 9590*1.10

$18079-X= 10549

$18079-10549= X

X= $7530

where, X is the fixed cost of indirect labor

Indirect labor of planning budget= $7530+$1.10*9110= $17551

Utilities of flexible budget= $23998+864= $24862

Utilities of actual result= $24862+1560= $26422

Variable cost of utilities

($23998-7600)/9110= X

X= $1.80

Calculation of Supplies formula

Flexible budget= (9590*X+Y)= $4554

Y= $4554-9590X............. (i)

Planning budget= (9110*X+Y)= $4410....... (ii)

Putting the equation (i) In equation (ii)

Planning budget= (9110*X+Y)= $4410

9110X+4554-9590X= $4410

$4554-480X= $4410

X= $144/480= $0.30

Putting the value of X in equation (i)

Y= $4554-9590*$0.30

Y= $1677

where Y is the fixed amount while X is variable cost per unit

Calculation of Factory administration

Actual results= $344736-190125-14685-26422-5094-81150= $27260

Flexible budget= $18920+$1.00*9590= $28510

Planning budget= $18920+$1.00*9110= $28030