Groschl Company hired a consultant to implement a flexible budgeting program to help control rising manufacturing overhead costs in its Machining Department. The consultant developed cost formulas based on normal operating ranges of 10,000-20,000 machine hours. In March, the department worked 18,000 hours but incurred higher than expected overhead costs. The consultant must now prepare an overhead performance report for March comparing actual costs to the flexible budget.

1. Groschl Company has had great difficulty in controlling manufacturing overhead costs. At a
recent convention, the president heard about a control device for overhead costs known as a
flexible budget, and he has hired you to implement this budgeting program in Groschl Company.
After some effort, you have developed the following cost formulas for the company's Machining
Department. These costs are based on a normal operating range of 10.000 to 20.000 machine-
hours per month: During March, the first month after your preparation of the above data, the
Machining Department worked 18,000 machine-hours and produced 9.000 units of product. The
actual manufacturing overhead costs for March were as follows: Fxed costs had ho budget
variances. The department had originally been budigeted to work 20.000 machine-hours during
March: 1. Prepare an overtread performance report for the Machining Depariment for the month
of March. (Indicate the effect of each varionce by selecting "F" for favorable, "U" for
unfavoroble, and "None" for no effect (lie., zero variance). Round "Cost Formula per MH"
answers to 2 decimal ploces.)