Redsea Inc. is a company that makes hand-made T-shirts. It started operations on January 1st, 2023. For its first year of operations, the company budgeted to make and sell 20,000 T-shirts at a selling price of $75; each was budgeted to use 2 yards of fabric and require 2.5 hours of direct labor work. The company budgeted to pay $2 per yard of fabric and compensate workers at an hourly wage of $20. The company budgeted $75,000 of fixed manufacturing overhead (no variable manufacturing overhead was budgeted). In 2023, RedSea Inc. actually made and sold 18,500 t-shirts. The company’s revenues’ were $1,258,000 and incurred in the following costs:
Variable manufacturing overhead $ 75,000.00
Fabric Costs (45,000 yards bought and used) $ 121,500.00
Direct manufacturing labor costs (49,000 hours) $ 857,500.00
1. Prepare a flexible budget performance report for 2023 (please label all variances as “F” or “U”).