Question

Performance Report Based on Budgeted and Actual Levels of Production

Bowling Company budgeted the following amounts:

Variable costs of production:
Direct materials	3 pounds @ $0.60 per pound
Direct labor	0.5 hr. @ $16.00 per hour
VOH	0.5 hr. @ $2.20
FOH:
Materials handling	$6,200
Depreciation	$2,600

At the end of the year, Bowling had the following actual costs for production of 3,800 units:

Direct materials	$6,800
Direct labor	30,500
VOH	4,200
FOH:
Materials handling	6,300
Depreciation	$2,600

Required:

1. Calculate the budgeted amounts for each cost category listed above for the 4,000 budgeted units.
$

2. Prepare a performance report using a budget based on expected production of 4,000 units. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number and if there is no entries enter "0" then select for "Not applicable".

Bowling Company
Performance Report
	Actual	Budgeted	Variance
Units produced
Direct materials	$	$	$
Direct labor
Variable overhead
Fixed overhead:
Materials handling
Depreciation
Total	$	$	$

3. Prepare a performance report using a budget based on the actual level of production of 3,800 units. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number and if there is no entries enter "0" then select for "Not applicable".

Bowling Company
Performance Report
	Actual	Budgeted	Variance
Units produced
Direct materials	$	$	$
Direct labor
Variable overhead
Fixed overhead:
Materials handling
Depreciation
Total	$	$	$

Answer 1

1) Budgeted amounts for each cost category for 4,000 budgeted units.

Particulars	Workings	Budgeted Amount
Productions		4000 units
Variable Cost
Direct Materials	4000*3*0.60	7200
Direct labour	4000*0.5*16	32000
VOH	4000*0.5*2.2	4400
FOH
Materials handling		6200
Depreciation		2600

2)

Bowling Company

Performance Report

	Actual	Budgeted	Variance
Units produced	3800	4000	-200
Direct material	6800	7200	-400
Direct labour	30500	32000	-1500
Variable OH	4200	4400	-200
Fixed OH :
Materials Handling	6300	6200	100
Depreciation	2600	2600	0
Total	50400	52400	-2000

3)

Bowling Company

Performance Report

	Actual	Budgeted	Variance
Units produced	3800	3800	0
Direct material	6800	3800*3*0.60 = 6840	-40
Direct labour	30500	3800*0.5*16 = 30400	100
Variable OH	4200	3800*0.5*2.2 = 4180	20
Fixed OH :
Materials Handling	6300	6200	100
Depreciation	2600	2600	0
Total	50400	50220	180