Sunday Corporation Prepared the Following Performance Report for Variable Overhead

question 37

Essay

Sunday Corporation prepared the following performance report for variable overhead costs for the last quarter of the year.Machine hours are the cost driver for all overhead costs.
$\begin{array}{|l|r|r|r|}\hline&&\text { Static }\\\text { Cost Driver(Machine Hours) }&\text { Actual }&\text { Budget }\\\text { Variable Overhead Costs: }&38,000&38,000&\text { Variances }\\\hline \text { Utilities } & \$ 15,700 & \$ 14,000 & \$ 1,700 \mathrm{U} \\\hline \text { Indirect Labor } & 86,500 & 80,500 & 6,000 \mathrm{U} \\\hline \text { Supplies } & 26,000 & 21,000 & 5,000 \mathrm{U} \\\hline \text { Maintenance } & \underline{44,900} & \underline{42,000} & \underline{2,900 \mathrm{U}} \\\hline \text { Total Variable Overhead Costs } & \$ 173,100 & \$ 157,500 & \$ 15,600 \mathrm{U} \\\hline\end{array}$
The cost formulas used for the variable overhead costs are:
$$\begin{array} { | l | c | } \hline \text { Variable Overhead Costs } & \text { Cost Formula } \\\hline \text { Utilities } & \$ 0.40 \text { per machine hour } \\\text { Indirect Labor } & \$ 2.30 \text { per machine hour } \\\text { Supplies } & \$ 0.60 \text { per machine hour } \\\text { Maintenance } & \$ 1.20 \text { per machine hour } \\\hline\end{array}$$
Your boss called you into the office and reprimanded you for the unfavorable variances.The boss says you are fired unless you can explain why the variances are all unfavorable.
Required:
Calculate the flexible budget variances and the activity-level variances for each cost.

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Definitions:

Yelled At

The act of raising one’s voice in a sharp, often aggressive manner, typically as a form of reprimand or expression of frustration towards someone.

Party

A social gathering of invited guests, typically involving eating, drinking, entertainment, and often celebrating a specific occasion.

Superstitious Behavior

Actions repeated because they are believed to lead to positive outcomes, without a logical cause-and-effect relationship.

Positive Reinforcer

A stimulus that, when presented after a response, increases the likelihood of that behavior occurring in the future.