Question

Campbell Clothing produces men's ties. The following budgeted and actual amounts are for 2016:

Cost Budget at 5,000 Units Actual Amounts at 5,800 Units
Direct materials $60,000 $71,000
Direct labor 75,000 86,500
Equipment depreciation 5,000 5,000
Indirect labor 7,500 8,600
Indirect materials 9,000 9,600
Rent and insurance 12,000 13,000
Instructions:
Prepare a FLEXIBLE performance budget report for Campbell Clothing for the year.

Answer 1

Campbell Clothing

Manufacturing Performance budget Report

For the year ended December 31, 2016

Budget Actual Difference

Direct materials $69,600 $71,000 $1,400 U

Direct labor $87,600 $86,500 $500 F

Equipment depreciation $5,000 $5,000 $0 Nil

Indirect labor $8,700 $8,600 $100 F

Indirect materials $10,440 $9,600 $840 F

Rent and insurance $12,000 $13,000 $1000 U

Total Costs $192,740 $193,700 $960 U

Workings

Planning budget

Direct materials 60,000 * $12 = $69,600

Direct labor 75,000 * $15,000 = $87,600

Equipment depreciation 5,000

Indirect labor 7,500 * $1.50 = $8,700

Indirect materials 9,000 * $1.80 = $10,440

Rent and insurance $12,000