Question

Wade Company estimates that it will produce 6,000 units of product IOA during the current month. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $11, and overhead $17. Monthly budgeted fixed manufacturing overhead costs are $7,500 for depreciation and $3,500 for supervision.

In the current month, Wade actually produced 6,500 units and incurred the following costs: direct materials $27,510, direct labor $65,000, variable overhead $109,956, depreciation $7,500, and supervision $3,710.

Prepare a static budget report. Hint: The Budget column is based on estimated production while the Actual column is the actual cost incurred during the period. (List variable costs before fixed costs.)

Wade Company Static Budget Report
						Difference
		Budget		Actual		Favorable Unfavorable Neither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnits ProducedVariable Costs
DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnits ProducedVariable Costs
Depreciation    Direct Labor    Direct Materials    Fixed Costs    Overhead    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units Produced    Variable Costs		$		$		$	FavorableUnfavorableNeither Favorable nor Unfavorable
Depreciation    Direct Labor    Direct Materials    Fixed Costs    Overhead    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units Produced    Variable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
Depreciation    Direct Labor    Direct Materials    Fixed Costs    Overhead    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units Produced    Variable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
Depreciation    Direct Labor    Direct Materials    Fixed Costs    Overhead    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units Produced    Variable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnits ProducedVariable Costs
Depreciation    Direct Labor    Direct Materials    Fixed Costs    Overhead    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units Produced    Variable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
Depreciation    Direct Labor    Direct Materials    Fixed Costs    Overhead    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units Produced    Variable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
Depreciation    Direct Labor    Direct Materials    Fixed Costs    Overhead    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units Produced    Variable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnits ProducedVariable Costs		$		$		$	FavorableUnfavorableNeither Favorable nor Unfavorable

Were costs controlled?

YesNo

Answer 1

Prepare a static budget report. Wade Company Static Budget Report Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget 6,000 Actual 6,500 Units Produced Variable Costs Direct Materials Direct Labor Overhead Total Variable Costs Fixed Costs Depreciation $30,000 66,000 102,000 198,000 $27,510 65.000 109,956 202,466 $2,490 Favorable 1,000 Favorable 7,956 Unfavorable 4,466 Unfavorable 7,500 7,500 Supervision Total Fixed Costs Total Costs 3,500 11,000 $209,000 3,710 11,210 $213,676 0 Neither Favorable nor Unfavorable 210 Unfavorable 210 Unfavorable $4,676 Unfavorable Were costs controlled? No Explanation: Budget: Direct Materials (6,000 units * $5) = Direct Labor (6,000 units * $11) = Overhead (6,000 units * $17) = $30,000 $66,000 $102,000