1st.

CASE
Hempstead Corporation plans to manufacture 8,000 units over the next month at the following costs: direct materials, $480,000; direct labor, $ 0,000; variable manufacturing overhead, $!"0,000; and fixed manufacturing overhead, $#00,000$ %he last amount, which includes $&4,000 of straight'line depreciation, resulted in a total budget of $((0,000$ )hortl* after the conclusion of the month, Hempstead reported the following costs:

Howard +rueger and his crews turned out ,,&00 units-a remar.able feat given that the compan*/s manufacturing plant was closed for several da*s because of bli00ards and impassable roads$ +rueger was especiall* pleased with the fact that total actual costs were less than budget$ He was thus ver* surprised when Hempstead/s general manager expressed unhappiness about the plant/s financial performance$ 1e2uired: 3$ 4repare a performance report that fairl* compares budgeted and actual costs for the period 5ust ended-namel*, the report that the general manager li.el* used when assessing performance$ 6$ )hould +rueger be praised for 7having met the budget7 or is the general manager/s unhappiness 5ustified8 9xplain, citing an* apparent problems for the firm$

2nd. CASE
:idwestern ;niversit* operates a motor pool for the convenience of its facult* and staff$ %he following budget was prepared for an upcoming period:

%he budget was based on the assumptions of &0 vehicles, with each vehicle being driven 8,000 miles$ :idwestern ac2uired two additional vehicles earl* in the period under stud*$ 3ctual miles driven during the period totaled !80,000$ <iscussions with the motor pool manager revealed that pool costs are variable and fixed in nature$ %he manager believed that miles driven was the most appropriate cost driver for stud*ing gasoline and oil expense$ =n contrast, the number of vehicles in the pool was the best base to use when stud*ing other selected costs$ 1e2uired: 3$ Contrast a static budget with a flexible budget$ 6$ )uppose that the universit*/s budget officer desired to prepare a report that compared budgeted and actual costs$ )hould the report be based on a static budget or a flexible budget8 >h*8 C$ ?n the basis of the information presented, determine the budgeted amounts for the five preceding costs that would be used in a flexible budget$