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 (i.e., zero variance). Input all amounts as positive values.)

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)						9,510						9,030
Direct labor	(		q)			$150,445			$147,405
Indirect labor	(		+	$1.20	q)		$2,938	F	$18,862
Utilities	(	$6,800	+		q)		$1,480	U		$480	U	$15,830
Supplies	(		+		q)	$4,982			$4,474			$4,330
Equipment depreciation	(	$79,150	)				$0	None		$0	None
Factory administration	(	$18,760	+	$1.20	q)
Total expense						$297,293

Answer 1

Ray Company
Production department flexible Budget performance report
For the month ended August 31
		Actual results	Spending Variances		Flexible Budget	Activity Variance		Planning Budget
Labor - hours	(q)	9510			9,510			9,030
Direct labor	( $16 q)	$               1,50,445	$   3,040	U	$     1,47,405	$      7,440	U	$    1,39,965
Indirect labor	($7450 + 1.20 q)	$                   15,924	$   2,938	F	$         18,862	$          576	U	$        18,286
Utilities	($6800 + $1.00 q)	$                   17,790	$   1,480	U	$         16,310	$          480	U	$        15,830
Supplies	( $1621 + 0.30 q)	$                     4,982	$       508	U	$           4,474	$          144	U	$          4,330
Equipment depreciation	($79150)	$                   79,150	$          -	None	$         79,150	$             -	None	$        79,150
Factory administration	($18760 + 1.20q)	$                   29,002	$   1,170	F	$         30,172	$          576	U	$        29,596
Total expense		$               2,97,293	$       920	U	$     2,96,373	$      9,216	U	$    2,87,157
Workings:
Direct labor	=	$147405 / 9510
		$                           16
Indirect labor
	( r + 1.20q) = $18862
	( r + 1.20 X 9510) = $18862
	r = $18862 - $11412
	r = $7450
Utilities
	($6800 + z q) = $16310
	($6800 + z * 9510) = $16310
	z = $1.00
Supplies
Let:	(x + yq) = 4474
	(x + yq) = 4330
also	(x + y * 9510) = 4474
or	(x + y* 9030) = 4330
	By computing above we get,
	x = $1621
	y = 0.30