Qualitative and quantitative

Qualitative and quantitative

Flexible budget

DescriptionCase Summary

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Case Analysis

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Executive Decisions

Explain why there could be variances in a flexible budget for fixed costs.
Case Study and analysis:Nashler Company has the following budget prepared for 150,000 units of activity:Direct materials

1,080,000
Direct labor

231,000
Variable overhead:
Supplies

34,500
Maintenance

28,500
Power

27,000
Total variable costs

1,401,000
Fixed overhead:
Supervision

98,000
Depreciation

76,000
Other overhead

245,000
Total fixed costs

419,000
Total costs

1,820,000
Their actual activity was 160,000 units and the following costs: direct materials 1,070,000, direct labor 240,000, supplies 32,500, maintenance 40,000, power 28,000,
supervision 100,000, depreciation 98,000, other overhead 250,000.Required: prepare a flexible budget for activity of 160,000 units and a variance analysis for the
actual activity level. Explain possible reasons for each of the variances.

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