At the end of 2008, Cyril Fedako, CFO for Fedako Products received a report comparing budgeted and actual production costs for the company’s plant in Forest Lake, Minnesota.,, Budget Actual Difference ,,Materials $3,000,000 $3,300,000 $300,000,DirectLabor 2,100,000 2,300,000 200,000,SupervisorSalary 375,000 400,000 25,000,Utilities 75,000 85,000 10,000,MachineMatine 250,000 280,000 30,000,Depreciate Build 50,000 50,000 0,Depreciate Equip 200,000 205,000 5,000,Janitorial 120,000 135,000 15,000,,Totals $6,170,000 $6,755,000 $585,000,,His first thoughts was that costs must be out of control since actual costs exceeded the budget by $585,000. However, he quickly recalled that the budget was set assuming a production level of 50,000 units. The Forest Lake plant actually produced 55,000 units in 2008.,,A. Given that production was greater than planned, should Cyril expect that all actual costs will be greeater than budgeted? Which costs would you expect to increase and which costs whould you expect to remain relatively constant?,,B. Cyril is extremly busy, the company has six other plants. Therefore, he cannot spend time investigating every departure from the budget. With this in mind, which cost(s) should Cyril concentrate on in his investigation of budget differences?
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