Flexible Budgets and Standard Costing Variance Analysis
Flexible Budgets and
Standard Costing Variance Analysis
1
Static Budgets and Performance Reports
CheeseCo
2
Preparing a Flexible Budget
Cost Total Formula Fixed per Hour Cost
Flexible Budgets
8,000
10,000
12,000
Hours
Hours
Hours
Machine hours
8,000 10,000
12,000
Variable costs Indirect labor Indirect material Power
Total variable cost
$ 4.00 3.00 0.50
$ 7.50
$ 32,000 24,000 4,000
$ 60,000
$ 40,000 30,000 5,000
$ 75,000
$ 48,000 36,000 6,000
$ 90,000
Fixed costs Depreciation Insurance
Total fixed cost Total overhead costs
$ 12,000 2,000
$ 12,000 2,000
$ 14,000 $ 74,000
$ 12,000 2,000
$ 14,000 $ 89,000
$ 12,000 2,000
$ 14,000 $ 104,000
3
Flexible Budget Performance Report
CheeseCo
Cost Total Formula Fixed per Hour Cost
Flexible Actual Budget Results Variances
Machine hours
8,000
8,000
0
Variable costs Indirect labor Indirect material Power
Total variable cost
$ 4.00 3.00 0.50
$ 7.50
$ 32,000 24,000 4,000
$ 60,000
$ 34,000 25,500 3,800
$ 63,300
$ 2,000 U 1,500 U 200 F
$ 3,300 U
Fixed costs Depreciation Insurance
Total fixed cost Total overhead costs
$ 12,000 2,000
$ 12,000 2,000
$ 14,000 $ 74,000
$ 12,000 2,050
$ 14,050 $ 77,350
$ 0 50 U 50 U
$ 3,350 U
4
Static Budgets and Performance
5
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