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.) Ray Company Production Department Flexible Budget Performance Report For the Month Ended August 31 For the Month Actual Flexible Results Spending Variances variances Budget 9,600 Activity Variances Planning Budget 9,120 Labor-hours (g) Direct labor $ 195,130 $ $ Indirect labor $ 3,028 F $ U 1,570 192,000 19,060 S Utilities ( $ 7,700 912 U $ $ 25,028 4,420 Supplies q + $ $ 5,108 4,564 | 5 81.400 S 0 None None Equipment depreciation Factory administration Total expense 18.940 + 1.10 ) $ 353,420

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)		9600			9600			9120
Direct labor	(20)q	195130	3130	U	192000	9600	U	182400
Indirect labor	($7540 + $1.20q)	16032	3028	F	19060	576	U	18484
Utilities	($7700 + $1.90q)	27510	1570	U	25940	912	U	25028
Supplies	($1684 + $0.30q)	5108	544	U	4564	144	U	4420
Equipment depreciation	($81400)	81400	0	None	81400	0	None	81400
Factory administration	($18940 + $1.10q)	28240	1260	F	29500	528	U	28972
Total expense		353420	956	U	352464	11760	U	340704

Supplies:

Variable cost = ($4564 - $4420)/(9600 - 9120) = $144/480 = $0.30

Fixed cost = $4564 - (9600 x $0.30) = $4564 - $2880 = $1684