Several years ago the Cookie Company developed a comprehensive budgeting system for profit planning and
control purposes. The line supervisors have been very happy with the system and with the reports being prepared
on their performance, but both middle and upper management have expressed considerable dissatisfaction with the
information being generated by the system. The following is the overhead performance report for the Baking department.
Cookie Company
Overhead performance report-Baking department
For the quarter ended March 31
			Actual	Budget	Variance
Units			33,000	36,000	3,000	U
Variable Overhead
	Indirect materials		33000	36000	3000	F
	Rework time		8200	9000	800	F
	Utilities		65000	72,000	7000	F
	Machine setup		16200	18000	1800	F
Total variable overhead cost			122400	135000	12600	F
Fixed overhead Costs
	Maintenance		79200	81000	1800	F
	Depreciation		10000	9800	200	U
	Inspection		60200	60000	200	U
Total fixed overhead cost			149400	150800	1400	F
Total overhead cost			271800	285800	14000	F
After receiving a copy of this overhead performance report, the supervisor of the baking department stated, "These reports
are super. It makes me feel really good to see how well things are going in my department. I can't understand why those people
upstairs complain so much."
Required:		Hint:	Make sure you have viewed the narrated PowerPoint for chapter 11
The company's vice president has hired you as a consultant to develop a new overhead performance report for the quarter for the
Baking department. After you have developed this new performance report, explain to the supervisor of the baking department the reasons
for your changes and discuss the issue of controlling costs.
Prepare the revised flexible performance report below. The categorization of variable and fixed are correct, so do not adjust this information.
Please use the template I have set out below to complete this Performance report.
Solution:
Cookie Company
Overhead performance report-Baking department
For the quarter ended March 31
			Actual	Budget	Variance
Units
Variable Overhead
	Indirect materials
	Rework time
	Utilities
	Machine setup
Total variable overhead cost
Fixed overhead Costs
	Maintenance
	Depreciation
	Inspection
Total fixed overhead cost
Total overhead cost
Explain to the supervisor of the baking department the reasons for your changes and discuss the issue of controlling costs.