Question

6.

Wyckam Manufacturing Inc. has provided the following information concerning its manufacturing costs:

	Fixed Cost per Month			Cost per Machine-Hour
Direct materials				$	5.40
Direct labor	$	42,700
Supplies				$	0.30
Utilities	$	1,400		$	0.25
Depreciation	$	15,000
Insurance	$	11,800

For example, utilities should be $1,400 per month plus $0.25 per machine-hour. The company expects to work 4,000 machine-hours in June. Note that the company’s direct labor is a fixed cost.

Required:

Prepare the company’s planning budget for June.

Answer 1

--Requirement, as asked

Planning Budget - June
Expected machine hours	4000
Variable costs:
Direct material (4000 x $ 5.40)	$21,600
Supplies (4000 x 0.30)	$1,200
Utilities (4000 x 0.25)	$1,000
Total Variable cost	$23,800
Fixed costs:
Direct Labor	$42,700
Utilities	$1,400
Depreciation	$15,000
Insurance	$11,800
Total Fixed cost	$70,900
Total budgeted cost	$94,700