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5. Malden Outdoor Products Inc. produces a number of products, including handmade large fiberglass planters...

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Accounting

5. Malden Outdoor Products Inc. produces a number of products, including handmade large fiberglass planters for outdoor displays. The firm, which began operations at the beginning of the current year, uses a standard cost system. The standard costs for one large planter are provided below:

Direct material (3 lbs. @ $8.00)

$ 24.00

Direct labor (2 hrs. @ $15.00)

30.00

Variable overhead

24.00

Fixed overhead

6.00

Standard cost per unit

$84.00

The $6.00 fixed overhead rate is based on total budgeted fixed overhead costs of $18,000 and estimated sales of 3,000 units. There were no changes in any inventory account during the period. The company produced and sold 3,100 units at the following costs:

Direct materials (9,000 lbs.)

$ 81,270

Direct labor (6,000 hrs.)

78,000

Variable overhead

76,000

Fixed overhead

16,500

Total production costs incurred

$251,770

Required

Prepare a flexible budget to evaluate the current year performance and compute the flexible budget variances. [15 points]

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