Adrian Power manufactures small power supplies for car stereos. The company uses flexible budgeting techniques to deal with the seasonal and cyclical nature of the business. The accounting department provided the accompanying data on budgeted manufacturing costs for the month of January: ADRIAN POWER  Planned Level of Production for January Budgeted Production (in units)                           14,000 Variable Cost (vary with production) Direct Material                                                             $140,000 Direct Labor                                                                       224,000 Indirect Labor                                                                       21,000 Indirect Material                                                                10,500 Maintenance                                                                            6,300 Fixed cost Supervision                                                                            24,700 Other (depreciation, taxes, ect.)                              83,000 Total plant cost                                                              $510,000  Actual operations for January are summarized as                                                 ADRIAN POWER                                 Actual Operations for January Actual Production (in units)                                    15,400 Actual Cost incurred Direct Material                                                             $142,400 Direct Labor                                                                       259,800 Indirect Labor                                                                       27,900 Indirect Material                                                                12,200 Maintenance                                                                            9,800 Supervision                                                                            28,000 Other (depreciation, taxes, ect.)                              83,500 Total plant cost                                                              $563,600 Required:  a. Prepare a report comparing the actual operating results with the flexible budget at actual production. b. Write a short memo analyzing the report prepared in part (a). What likely managerial implications do you draw from this report? What are the numbers telling you? .

1. Adrian Power manufactures small power supplies for car
stereos. The company uses flexible budgeting techniques to deal
with the seasonal and cyclical nature of the business. The
accounting department provided the accompanying data on
budgeted manufacturing costs for the month of January:
ADRIAN POWER
Planned Level of Production for January
Budgeted Production (in units) 14,000
Variable Cost (vary with production)
Direct Material
$140,000
Direct Labor
224,000
Indirect Labor
21,000
Indirect Material
10,500
Maintenance
6,300
Fixed cost
Supervision

2. 24,700
Other (depreciation, taxes, ect.) 83,000
Total plant cost
$510,000
Actual operations for January are summarized as
ADRIAN POWER
Actual Operations for January
Actual Production (in units) 15,400
Actual Cost incurred
Direct Material
$142,400
Direct Labor
259,800
Indirect Labor
27,900
Indirect Material
12,200
Maintenance
9,800
Supervision

3. 28,000
Other (depreciation, taxes, ect.) 83,500
Total plant cost
$563,600
Required:
a. Prepare a report comparing the actual operating results with
the flexible budget at actual production. b. Write a short memo
analyzing the report prepared in part (a). What likely
managerial implications do you draw from this report? What are
the numbers telling you?