Performance reporting and flexible budgeting
Response to the following problem:
For the stamping department of a manufacturing firm, the standard cost for direct labor is $12 per hour, and the production standard calls for 2,000 stampings per hour. During February, 121 hours were required for actual production of 230,000 stampings. Actual direct labor cost for the stamping department for June was $1,573.
Required:
a. Complete the following performance report for February:
Flexible Budget Actual Budget variance
Direct Labor
b. Analyze the budget variance by calculating the direct labor efficiency and rate variances for February.
c. What alternatives to the preceding monthly report could improve control over the stamping department's direct labor?