Following is Perry Corporation’s original budget for 2013, and their actual resu
ID: 2516670 • Letter: F
Question
Following is Perry Corporation’s original budget for 2013, and their actual results for 2013. [32 points]
Original Budget
(100,000 units)
Materials
Fabric
100,000 yds @ $5.40/yd
$540,000
Steel tubing
25,000 lbs @ $12.10/lb
302,500
Padding
50,000 lbs @ $.50/lb
25,000
Direct Labor
Machining
30,000 hrs @ $19/hr
570,000
Assembly
10,000 hrs @ $11.80/hr
118,000
Overhead
Rent
100,000
Property taxes
10,000
Other Overhead
(25% variable)
200,000
Total
$1,865,500
Actual Results
(120,000 units)
Materials
Fabric
125,000 yds @ $5.50/yd
$687,500
Steel tubing
32,000 lbs @ $12.20/lb
390,400
Padding
65,000lbs @ .49/lb
31,850
Direct Labor
Machining
35,000 hrs @ $18/hr
630,000
Assembly
11,000 hrs @ $11.50/hr
126,500
Overhead
Rent
96,000
Property taxes
10,000
Other Overhead
210,000
Total
$2,182,250
Using the format on the following page, prepare the flexible budget needed to evaluate Perry Corporation’s performance for 2013, and compute the Flex-Actual Variances. Show your calculations.
Original Budget
(100,000 units)
Materials
Fabric
100,000 yds @ $5.40/yd
$540,000
Steel tubing
25,000 lbs @ $12.10/lb
302,500
Padding
50,000 lbs @ $.50/lb
25,000
Direct Labor
Machining
30,000 hrs @ $19/hr
570,000
Assembly
10,000 hrs @ $11.80/hr
118,000
Overhead
Rent
100,000
Property taxes
10,000
Other Overhead
(25% variable)
200,000
Total
$1,865,500
Explanation / Answer
Flex Actual Varaince = 2266875 - 2182250 = 84625 F
Flexible Budget: Particulars Budgeted Actual Variance Units 125000 Units A 125000 Units B (A-B) Material Fabric (100000/100000*125000)*5.4 675,000.00 125000*5.5 687,500.00 12500 U Steel Tubing (25000/100000*125000)*12.10 378,125.00 32000*12.20 390,400.00 12275 U Padding (50000/100000*125000)*0.5 31,250.00 65000*0.49 31,850.00 600 U Direct Labour Machining (30000/100000*125000) *19 712,500.00 35000*18 630,000.00 82500 F Assembly (10000/100000*125000) *11.8 147,500.00 11000*11.5 126,500.00 21000 F Overhead Rent 100,000.00 96,000.00 4000 F Property Tax 10,000.00 10,000.00 - Other Overhead 210,000.00 2500 F Fixed Overhead 200000*75% 150,000.00 Variable Overhead (200000*25%)/100000*125000 62,500.00 Total 2,266,875.00 2,182,250.00 84625 F