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- 3. Product Costs - A Closer Look Costs associated with the goods that are completed during the period are transferred to finished goods inventory.
- 4. The Contribution Format The contribution margin format emphasizes cost behavior. Contribution margin covers fixed costs and provides for income.
- 6. The Master Budget Direct Materials Budget Ending Inventory Budget Production Budget Selling and Administrative Budget Direct Labor Budget Manufacturing Overhead Budget Cash Budget Budgeted Financial Statements Sales Budget
- 8. Labor Variances Summary Actual Hours Actual Hours Standard Hours × × × Actual Rate Standard Rate Standard Rate Rate variance $310 unfavorable Efficiency variance $300 unfavorable 1,550 hours 1,550 hours 1,500 hours × × × $6.20 per hour $6.00 per hour $6.00 per hour = $9,610 = $9,300 = $9,000
- 9. Flexible Budget Performance Report CheeseCo Cost Total Formula Fixed Flexible Actual Per Hour Costs Budget Results Variances Machine hours 8,000 8,000 0 Variable costs Indirect labor 4.00 $ 32,000 $ 34,000 $ $ 2,000 U Indirect material 3.00 24,000 25,500 1,500 U Power 0.50 4,000 3,800 200 F Total variable costs 7.50 $ 60,000 $ 63,300 $ $ 3,300 U Fixed Expenses Depreciation 12,000 $ 12,000 $ 12,000 $ 0 Insurance 2,000 2,000 2,050 50 U Total fixed costs 14,000 $ 14,050 $ 50 U Total overhead costs 74,000 $ 77,350 $ $ 3,350 U