Joanne Graves Is Manager of a Production Department of Fordham

Essay

Joanne Graves is manager of a production department of Fordham Company. Her department makes one product; the following information for her department was accumulated for the current year:
Required:
1) Prepare a flexible budget for the department's actual level of activity.2) Use the flexible budget to evaluate the performance of Ms. Graves' department.3) Why does the budget not include sales revenue and net income?
$\begin{array}{|l|r|r|}\hline &{\text { Static Budget }} & {\text { Actual Results }} \\\hline \text { Number of units } & 100,000 & 94,000 \\\hline\text { Direct materials cost }&\$400,000&\$380,000\\\hline \text { Direct labor cost } & 200,000 & 185,000 \\\hline \text { Variable manufacturing overhead } & 100,000 & 94,000 \\\hline \text { Fixed manufacturing overhead } & 145,000 & 148,000 \\\hline \text { Total } & \$ 845,000 & \$ 807,000 \\\hline\end{array}$