Static Budget and Flexible Budget

 how to create a static budget and flexible budget. 

ABC Corp produces alphabet flash cards for grammar schools. They forecast that they
will need to produce 90,000 sets of cards for the 2006-2007 school year. They budget the
following costs for each set of cards.
Cost per set
Materials (1/2 pounds cardboard @ $1.5 per pound)
$ .75
Labor (1/4 hour @ $10 per hour)
$ 2.50
Variable overheads (1/4 hour @ $5 per hour)
$ 1.25
Fixed Overhead
$21,000
Actual results for the academic year were:
Production
Materials purchased and used
Actual labor
Actual Variable Overhead
Actual Fixed Overhead
80,000 sets of cards
38000 pounds @ 1.3 per pound
23,000 hours costing $245,000
$130,000
$22,000
Required: 1. Prepare an analysis that shows the Volume Variance and the Flex Variance
using per unit costs and a static budget, a flexible budget and actual costs.
2. Compute Material Price and Quantity Variances
3. Compute the Labor Rate and Efficiency Variances