Question

Gundy Company expects to produce 1,304,400 units of Product XX in 2020. Monthly production is expected to range from 87,000 to 127,000 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $7, and overhead $9. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $1.
In March 2020, the company incurs the following costs in producing 107,000 units: direct materials $455,000, direct labor $746,000, and variable overhead $971,000. Actual fixed costs were equal to budgeted fixed costs.
Prepare a flexible budget report for March. (List variable costs before fixed costs.)

Answer 1

Answer:

                             Gundy Company

             Manufacturing Flexible Budget Report

             For the Month Ended March 31, 2020

                                   Budget                Actual

Units produced         107,000               107,000  

Variable Costs:

Direct Materials        $428,000            $455,000      $27,000 U

                                 ($4 * 107,000)

Direct labor               $749,000             $746,000      $3,000 F

                                  ($7 * 107,000)

Overhead                   $963,000            $971,000      $8,000 U

                                  ($9 ×* 107,000)

Total variable costs  $2,140,000          $2,172,000  $32,000 U

Fixed Costs:

Depreciation                $434,800           $434,800     $0

Supervision                  $108,700            $108,700      $0

Total fixed costs          $543,500          $543,500     $0

Total costs                   $2,683,500         $2,715,500    $32,000 U

Workings:

Depreciation = (1,304,400 * $4) / 12 = $5,217,600 / 12 = $434,800

Supervision = (1,304,400 * $1) / 12 = $1,304,400 / 12  = $108,700