Question

B&L Landscapes, Inc. Mini Practice Part 5 Bill Graham and Larry Miller incorporated B&L Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer. During 2015, B&L Landscapes, Inc. acquired a 30% interest in Crestline Pipe. The president of Crestline wants to develop a management report to evaluate Manufacturing Overhead costs. Bill and Larry want to help and have volunteered your services to provide some managerial reporting for Crestline. Crestline Pipe distributes high-quality PVC pipe and has the following information for the month of March, 2015 Crestline Pipe Manufacturing Overhead Budget (Static) For the Month of March, 2015 Budgeted production in LF 117,500 Budgeted costs Indirect materials ($0.30/DLH) 7,050 Indirect labor ($0.50/DLH) 11,750 Utilities ($0.40/DLH) 9,400 Maintenance ($0.25/DLH) 5,875 Salaries 42,000 Depreciation 16,800 Property taxes 2,500 Insurance 1,200 Janitorial 1,300 Total budgeted costs $97,875 Crestline Pipe Manufacturing Overhead Costs (Actual) For the Month of March, 2015 Actual production in LF 118,500 Actual costs Indirect materials) 7,100 Indirect labor 11,825 Utilities 10,700 Maintenance 5,900 Salaries 42,000 Depreciation 16,800 Property taxes 2,500 Insurance 1,200 Janitorial 1,300 Total budgeted costs $99,325 Crestline Pipe had the following static budget and overhead costs for March. Manufacturing overhead is budgeted based on direct labor hours (DLH). Direct labor is budgeted at 12 minutes per linear foot (LF). Instructions: 1. Prepare a flexible manufacturing overhead budget based on the following amounts produced. a) 115,500 LF b) 116,500 LF c) 117,500 LF d) 118,500 LF e) 119,500 LF 2. Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. Include your analysis of what variances should be investigated further. 3. Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable. Provide a brief evaluation of how this information could be used to measure the manufacturing manager’s performance.

ACC122 Accounting Principles II

B&L LANDSCAPES, INC.

Manufacturing Overhead Flexible Budget

For the Month of March, 2015

Production in LF 115,500 116,500 117,500 118,500 119,500

Variable Costs

Indirect Materials

Indirect Labor

Utilities

Maintenance

Total Variable Costs

Fixed Costs

Salaries

Depreciation

Property Taxes

Insurance

Janitorial

Total Fixed Costs

Total Budgeted Costs

ACC122 Accounting Principles II

B&L LANDSCAPES, INC.

Manufacturing Overhead Flexible Budget Report

For the Month of March, 2015

Budget Actual Difference " Favorable/

Unfavorable "

Production in LF

Variable Costs

Indirect Materials

Indirect Labor

Utilities

Maintenance

Total Variable Costs

Fixed Costs

Salaries

Depreciation

Property Taxes

Insurance

Janitorial

Total Fixed Costs

Total Budgeted Costs

ACC122 Accounting Principles II

B&L LANDSCAPES, INC.

Responsibility Report Manufacturing Overhead

For the Month of March, 2015

Constrollable Cost Budget Actual Difference " Favorable/

Unfavorable "

Indirect Materials

Indirect Labor

Utilities

Maintenance

Answer 1

1)
Prepare a flexible manufacturing overhead budget based on the following amounts produced.
B&L LANDSCAPES, INC.
Manufacturing Overhead Flexible Budget
For the Month of March, 2015
Production in LF	115,500	116,500	117,500	118,500	119,500
Variable Costs
Indirect Materials ($0.30/DLH x 12 min./60 min.	6,930	6,990	7,050	7,110	7,170
Indirect Labor ($.50/DLH x 12min/60 Min)	11550	11650	11750	11850	11950
Utilities ($.40/DLH x 12 min/60 Min)	10395	10485	10575	10665	10755
Maintenance ($.25/DLH x 12 min/60Min)	5775	5825	5875	5925	5975
Total Variable Costs	34,650	34,950	35,250	35,550	35,850
Fixed Costs
Salaries	42000	42000	42000	42000	42000
Depreciation	16800	16800	16800	16800	16800
Property Taxes	2500	2500	2500	2500	2500
Insurance	1200	1200	1200	1200	1200
Janitorial	1300	1300	1300	1300	1300
Total Fixed Costs	63800	63800	63800	63800	63800
Total Budgeted Costs	98,450	98,750	99,050	99,350	99,650
2)
B&L LANDSCAPES, INC.
Manufacturing Overhead Flexible Budget Report
For the Month of March, 2015
	Budget	Actual	Difference	F/UF
Production in LF
Variable Costs	118,500	118,500
Indirect Materials	7,110	7,100	10	F
Indirect Labor	11,850	11,825	25	F
Utilities	10,665	10,700	35	U
Maintenance	5,925	5,900	25	F
Total Variable Costs	35,550	35,525	95	F
Fixed Costs
Salaries	42,000	42000	0	N
Depreciation	16,800	16800	0	N
Property Taxes	2,500	2500	0	N
Insurance	1,200	1200	0	N
Janitorial	1,300	1300	0	N
Total Fixed Costs	63,800	63,800	0	N
Total Budgeted Costs	99,350	99,325	25	F
3)
B&L LANDSCAPES, INC.
Responsibility Report Manufacturing Overhead
For the Month of March, 2015
Controllable Cost	Budget	Actual	Difference
Indirect Materials	7,110	7,100	10
Indirect Labor	11,850	11,825	25
Utilities	10,665	10,700	35
Maintenance	5,925	5,900	25
Total Variable Cost	35,550	35,525	25