Bill graham and larry miller incorporated b&l landscapes, inc. on

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.