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Problem - The following budgeted and actual volume and cost data are for July of this year:
Budget
Actual
Volume
20,000
18,000
Budgeted manufacturing costs:
Variable costs per unit:
Direct materials
$17.00
Direct labor
7.00
Overhead
2.00
Total fixed overhead costs
$220,000
Actual manufacturing costs:
$310,000
135,000
Variable overhead
36,000
Fixed overhead
210,000
Required - Develop a flexible budget analysis of production costs for July of this year. Indicate both the amount and direction (Favorable versus Unfavorable) of the spending variance (difference between the flexible budget amount and the actual amount).
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