Original Budget

Actual

Flexible Budget

 

Units Produced (in units)

10,000

12,000

?

 

Materials used (kg)

400

700

?

 

Material cost ($)

8,000

See purchases

?

 

Direct Labour (hours)

35,000

46,102

?

 

Direct Labour ($)

385,000

507,080

?

 

Variable Overhead ($)

350,000

419,161

?

 

Fixed Overhead ($)

160,000

161,000

?

Other Information

Overhead is Allocated on Direct Labour Hours

During the year, 800 kg of materials were purchased for $5,000

Beginning Inventory: none

Ending Inventory:  100kg

Required: 

Calculate the flexible budget amounts for all items.

Calculate the following variances

• Material Rate
• Material Efficiency
• Labour Price
• Labour Efficiency
• Variable Overhaed Rate
• Variable Overhead Efficiency
• Fixed Overhead Rate
• Fixed Overhead Production Volume
• Assume that the Material, Labour and Variable Overhead variances are inter-related. What is the most likely single cause of these variances. Briefly explain your answer.

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