acc 5

B&L Landscapes, Inc. Mini Practice Part 5

Bill Graham and Larry Miller incorporated B&L Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer.

During 2015, B&L Landscapes, Inc. acquired a 30% interest in Crestline Pipe. The president of Crestline wants to develop a management report to evaluate Manufacturing Overhead costs. Bill and Larry want to help and have volunteered your services to provide some managerial reporting for Crestline.

Crestline Pipe distributes high-quality PVC pipe and has the following information for the month of March, 2015

Crestline Pipe

Manufacturing Overhead Budget (Static)

For the Month of March, 2015

Budgeted production in LF 117,500

Budgeted costs

Indirect materials ($0.30/DLH) 7,050

Indirect labor ($0.50/DLH) 11,750

Utilities ($0.40/DLH) 9,400

Maintenance ($0.25/DLH) 5,875

Salaries 42,000

Depreciation 16,800

Property taxes 2,500

Insurance 1,200

Janitorial 1,300

Total budgeted costs $97,875

Crestline Pipe

Manufacturing Overhead Costs (Actual)

For the Month of March, 2015

Actual production in LF 118,500

Actual costs

Indirect materials) 7,100

Indirect labor 11,825

Utilities 10,700

Maintenance 5,900

Salaries 42,000

Depreciation 16,800

Property taxes 2,500

Insurance 1,200

Janitorial 1,300

Total budgeted costs $99,325

Crestline Pipe had the following static budget and overhead costs for March. Manufacturing overhead is budgeted based on direct labor hours (DLH). Direct labor is budgeted at 12 minutes per linear foot (LF).

Instructions:

1. Prepare a flexible manufacturing overhead budget based on the following amounts produced.

a) 115,500 LF

b) 116,500 LF

c) 117,500 LF

d) 118,500 LF

e) 119,500 LF

2. Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. Include your analysis of what variances should be investigated further.

3. Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable. Provide a brief evaluation of how this information could be used to measure the manufacturing manager’s performance.