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dolphi86 [110]
3 years ago
15

Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets an

d performance reports. During October, the company budgeted for 6,700 units, but its actual level of activity was 6,650 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:
Data used in budgeting:

Fixed element
per month Variable element per unit
Revenue — $34.20
Direct labor $0 $6.20
Direct materials 0 13.80
Manufacturing overhead 37,000 1.70
Selling and administrative expenses 25,500 0.20
Total expenses
$62,500

$21.90
Actual results for October:

Revenue $228,900
Direct labor $41,130
Direct materials $93,235
Manufacturing overhead $43,500
Selling and administrative expenses $30,470
The direct materials in the flexible budget for October would be closest to:
A. $91,770
B. $93,965
C. $92,460
D. $93,055
Business
1 answer:
yKpoI14uk [10]3 years ago
4 0

Answer:

A. $91,770

Explanation:

The direct materials in the flexible budget for October:

Cost = Variable Cost + Fixed Cost

Variable Cost = Actual level of activity*Direct material Variable element per unit = 6,650 units * $13.80 = $91,770

Fixed Cost = $0

So, the direct materials in the flexible budget for October = $91,770 + 0 = $91,770.

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3 years ago
SafeRide, Inc. produces air bag systems that it sells to North American automobile manufacturers. Although the company has a cap
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Answer:

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b. Under full capacity, the total production cost will increase by $1,485,000 for adding additional facilities while the sales revenue would increase by $540,000, resulting to a loss of $945,000.

c. Under full-capacity circumstances, there is a financing disadvantage of accepting the order because the order will entail additional capacity and facilities, resulting to a loss of $945,000.

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Annual production capacity = 300,000 units

Current production capacity = 180,000 units

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Special order price per unit = $9.00

Budgeted Costs For      180,000 Units  240,000 Units  Difference 60,000

Manufacturing costs

Direct materials                 $450,000           $600,000       $150,000

Direct labor                           315,000             420,000          105,000

Factory overhead              1,215,000           1,260,000           45,000

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Total                              $2,745,000        $3,060,000        $315,000

Costs per unit

Manufacturing                       $11.00                  $9.50

Selling and administrative       4.25                     3.25

Total                                     $15.25                  $12.75

Selling price to North American manufacturers = $20 per unit

Financial implications of accepting the order:

Manufacturing costs

Direct materials                  $150,000

Direct labor                           105,000

Factory overhead                  45,000

Total                                  $300,000

Selling and administrative    15,000

Total                                  $315,000

Total cost per unit = $5.25 ($315,000/60,000)

Total manufacturing cost per unit = $5 ($300,000/60,000)

Increase in net income from accepting the order = $225,000 ($9.00 - $5.25) * 60,000

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Direct materials                  $150,000 (variable)

Direct labor                           105,000 (variable)

Factory overhead              1,215,000

Total                                $1,470,000

Selling and administrative    15,000 (assumed to be variable)

Total                               $1,485,000

Unit cost per additional unit = $24.75

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Answer:

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