Answer:
Gundy Company
Flexible Budget Report for the month of March, 2020:
Flexible Budget Actual Budget Variance
Direct materials $400,000 $425,000 $25,000 U
Direct labor $700,000 $695,000 $5,000 F
Overhead $1,000,000 $1,005,000 $5,000 U
Fixed Cost $632,000 $632,000 $0 None
Explanation:
a) Data and Calculations:
Expected production units for 2020 = 1,243,200
Monthly production range = 79,000 to 121,000
Budgeted variable manufacturing costs per unit are:
Direct materials $4
Direct labor $7
Overhead $10
Total variable cost $21
Budgeted fixed manufacturing costs per unit:
Depreciation $5
Supervision $3 $8
Total costs $29
Total fixed cost = 79,000 * $8 = $632,000
Actual costs incurred in March 2020:
Production units = 100,000
Direct materials = $425,000 ($4.25 per unit)
Direct labor = $695,000 ($6.95 per unit)
Variable overhead = $1,005,000 ($10.05 per unit)
Actual fixed costs = $632,000
Flexible Budget:
Direct materials $400,000 ($4 * 100,000)
Direct labor $700,000 ($7 * 100,000)
Overhead $1,000,000 ($10 * 100,000)
Fixed Cost $632,000
