Acme Company’s production budget for August is 18,100 units and includes the following component unit costs:...

Acme Company’s production budget for August is 18,100 units and includes the following component unit costs: direct materials, $8.00; direct labor, $10.50; variable overhead, $6.50. Budgeted fixed overhead is $38,000. Actual production in August was 19,872 units. Actual unit component costs incurred during August include direct materials, $9.00; direct labor, $10.00; variable overhead, $7.50. Actual fixed overhead was $40,100.

Required:

Prepare a performance report, including each cost component. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Total

Expert Solution

All working forms part of the answer
Performance Report is provided by reflecting Variances. Both Activity Variances and Spending Variances have been calculated below.
Performance Report

	Actual Costs	Spending Variances		Flexible Budget	Activity Variances		Planning/Static Budget
Production of Units - Level of Activity	19,872			19,872			18,100
Direct material	$ 178,848.00	$ 19,872.00	Unfavourable	$ 158,976.00	$ 14,176.00	Unfavourable	$ 144,800.00
Direct Labor	$ 198,720.00	$ 9,936.00	Favourable	$ 208,656.00	$ 18,606.00	Unfavourable	$ 190,050.00
Variable Overhead	$ 149,040.00	$ 19,872.00	Unfavourable	$ 129,168.00	$ 11,518.00	Unfavourable	$ 117,650.00
Fixed Overhead	$ 40,100.00	$ 2,100.00	Unfavourable	$ 38,000.00	$ -	None	$ 38,000.00
Total Costs	$ 566,708.00	$ 31,908.00	Unfavourable	$ 534,800.00	$ 44,300.00	Unfavourable	$ 490,500.00

Working for calculation

	Actual Costs	Flexible Budget	Planning/Static Budget
Production of Units - Level of Activity	19872	19872	18100
Direct material	=19872 units x $9	=19872 units x $8	=18100 units x $8
Direct Labor	=19872 units x $10	=19872 units x $10.5	=18100 units x $10.5
Variable Overhead	=19872 units x $7.5	=19872 units x $6.5	=18100 units x $6.5
Fixed Overhead	40100	38000	38000

ekkarill92 answered 2 years ago

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