Gonzalez Company produces one product Olpe. Because of wide fluctuations in demand for Olpe the Assembly Department experiences significant variations in monthly production levels.'The annual master manufacturing overhead budget below is based on 300000 direct labor hours In July 27500 labor hours were worked. The master manufacturing overhead budget for the year and the actual overhead costs incurred in July are as follows.
Overhead costs Master budget Actual results for July
Indirect labor 300000 26000
Indirect material 150000 11350
Utilities 90000 8050
Maintenance 60000 5400
Fixed 144000 12000
Supervision 96000 8000
Depreciation 60000 5000
Insurance and taxes 900000 75800
Prepare a budget report for the month of July 2014 comparing actual results with budget data based on the flexible budget. Were costs effectively controlled? Explain.
Prepare the flexile budget graph showing total budgeted costs assuming monthly produciton levels range from 25000 to 30000 direct labor hours