Jael Equipment Uses a Flexible Budget for Its Indirect Manufacturing

Essay

Jael Equipment uses a flexible budget for its indirect manufacturing costs. For 2012 the company anticipated that it would produce 18,000 units with 3,500 machine-hours and 7,200 employee days. The costs and cost drivers were to be as follows:
During the year, the company processed 20,000 units; worked 7,500 employee days; and, had 4,000 machine hours. The actual costs for 2012 were:
Required:
a. Prepare the static-budget using the overhead items above and then compute the static-budget variances.
b. Prepare the flexible-budget using the overhead items above and then compute the flexible-budget variances.