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Flexible Budget

The budgeted prices for materials and direct labor per unit of finished product are $11 and $55, respectively. The production manager is delighted about the following data:

The budgeted prices for materials and direct labor per unit of finished product are $11 and $55, respectively. The production manager is delighted about the following data:
Static Budget Actual Costs Variance
Direct materials 77,000 72,000 5,000
Direct Labor 35,000 32,000 2,400

Is the manager's happiness justified? Prepare a report that might provide a more detailed explanation of why the static budget was not achieved. Good output was $5,800 units.

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The budgeted prices for materials and direct labor per unit of finished product are $11 and $5, respectively. The production manager is delighted about the following data:

Static Budget Actual Costs Variance
Direct materials 77,000 72,000 5,000
Direct Labor 35,000 32,000 2,400

Is the manager's happiness ...

Solution Summary

The solution explains the use of flexible budget in performance evaluation

$2.19