70.2K

Verified Solution

Link Copied!

Walmart. uses budgets in an effort to control costs. The June 2016 budget report for the companys manufacturing operations is as follows:

Walmart

Budget Report

Manufacturing Operations

For the Month Ended June 30, 2016

Manufacturing Costs	Budget	Actual	Difference	Favorable (F) Unfavorable (U)
Variable costs
Direct materials	$ 96,000	$ 94,000	$ 2,000	F
Direct labor	108,000	102,000	6,000	F
Indirect materials	48,000	49,000	1,000	U
Indirect labor	36,000	38,000	2,000	U
Repairs	12,000	13,000	1,000	U
Utilities	30,000	28,000	2,000	F
Total variable costs	330,000	324,000	6,000	F
Fixed costs
Rent	24,000	24,000	0
Supervisor salary	34,000	34,000	0
Depreciation	12,000	12,000	0
Total fixed costs	70,000	70,000	0
Total costs	400,000	394,000	6,000	F

The monthly budget was based on production of 120,000 units per month (1,440,000 units per year). The manufacturing manager is proud of the fact that the report reflected a favorable variance and expects that he will be rewarded for spending less than budget. The controller of the company was not happy with the June results because there were only 115,000 units produced.

Prepare a performance report for June that includes a flexible budget.

Answer & Explanation Solved by verified expert

See Answer