The Machining Department supervisor has been very pleased with this performance because actual expenditures for January–March ha
ve been less than the monthly static budget of $335,000. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:
Wages per hour $15.00
Utility cost per direct labor hour $1.20
Direct labor hours per unit 0.75
Planned monthly unit production 100,000
Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Enter all amounts as positive numbers.
Wages per hour $15.00
Utility cost per direct labor hour $1.20
Direct labor hours per unit 0.75
Planned monthly unit production 100,000
Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Enter all amounts as positive numbers.
1 answer:
Answer:
The total units produced are as follows:
January: 90000 units
February: 100000 units
March: 110000 units
Explanation:
The total units produced are as follows:
January: 90000 units
February: 100000 units
March: 110000 units
Wages for each month are calculated as:
January: Wages = (Units * Direct labor hours per unit) + (hours * wages per hour) = (90000*$0.75) + (22500*$15) = $405000
February: Wages = (Units * Direct labor hours per unit) + (hours * wages per hour) = (100000*$0.75) + (25000*$15) = $450000
March: Wages = (Units * Direct labor hours per unit) + (hours * wages per hour) = (110000*$0.75) + (27500*$15) = $495000
Utilities for each month is:
January: Utility: = (hours * Utility cost per direct labor hour) = 22500 * 1.20 = $27000
February: Utility: = (hours * Utility cost per direct labor hour) = 25000 * 1.20 = $30000
March: Utility: = (hours * Utility cost per direct labor hour) = 27500 * 1.20 = $33000
Since depreciation is fixed and do not flex it is the same for all the months at $60000
The total for each month is:
January: Total = Wages + Utilities + depreciation = $405000 + $27000 + $60000 = $492000
February: Total = Wages + Utilities + depreciation = $450000 + $30000 + $60000 = $540000
March: Total = Wages + Utilities + depreciation = $495000 + $33000 + $60000 = $588000
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