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# Braemar Saddlery: revised performance report- flexible budge

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Braemar Saddlery uses department budgets and performance reports in planning and controlling its manufacturing operations. The following annual performance report for the custom saddle production department was presented to the president of the company:

Budgeted Costs Actual Over
for 5,000 Units Costs (Under)
Incurred Budget

Per Unit Total
Variable manufacturing costs:
Direct materials \$ 30.00   \$ 150,000   \$ 171,000   \$ 21,000
Direct labor 48.00   240,000   261,500   21,500
Indirect labor 15.00   75,000   95,500   20,500
Indirect materials, supplies, etc. 9.00   45,000   48,400   3,400

Total variable manufacturing costs \$ 102.00   \$ 510,000   \$ 576,400   \$ 66,400

Fixed manufacturing costs:
Lease rental \$ 9.00   \$ 45,000   \$ 45,000   \$ ­0­
Salaries of foremen 24.00   120,000   125,000   \$ 5,000
Depreciation and other 15.00   75,000   78,600   3,600

Total fixed manufacturing costs \$ 48.00   \$ 240,000   \$ 248,600   \$ 8,600

Total manufacturing costs \$ 150.00   \$ 750,000   \$ 825,000   \$ 75,000

Performance Report for Custom Saddle Production Dept.
For the Year Ended December 31, 20__
Budgeted Costs Actual Over
for 6,000 Units Costs (or Under)
Per Unit Total Incurred Budget
Variable manufacturing costs:

Total variable manufacturing costs \$   \$   \$   \$

Fixed manufacturing costs:

Total fixed manufacturing costs \$   \$   \$   \$

Total manufacturing costs \$   \$   \$   \$

b. What is the amount of over- or underapplied manufacturing overhead for the year? (Note that a standard cost system is not used.) (Omit the "\$" sign in your response.)

Learning Objective: 23-02 Discuss the benefits that a company may derive from a formal budgeting process.
Learning Objective: 23-05 Prepare the budgets and supporting schedules included in a master budget.
Learning Objective: 23-04 Describe the elements of a master budget.
Learning Objective: 23-06 Prepare a flexible budget and explain its uses.

##### Solution Summary

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• MSc, University of Virginia
• PhD, Georgia State University
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