Question

Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and actual overhead costs for March.

WATERWAYS CORPORATION Manufacturing Overhead Budget (Static) For the Month of March
Budgeted production in units		124,000
Budgeted costs
Indirect materials		$6,200
Indirect labor		13,640
Utilities		12,400
Maintenance		8,680
Salaries		44,700
Depreciation		17,100
Property taxes		3,300
Insurance		1,300
Janitorial		1,400
Total budgeted costs		$108,720

WATERWAYS CORPORATION Manufacturing Overhead Costs (Actual) For the Month of March
Production in units		125,000
Costs
Indirect materials		$6,234
Indirect labor		13,723
Utilities		12,530
Maintenance		8,730
Salaries		44,700
Depreciation		17,100
Property taxes		3,300
Insurance		1,300
Janitorial		1,400
Total costs		$109,017

Waterways produced 125,000 units in March rather than the budgeted number of units.

Prepare a flexible overhead budget based on the following amounts produced. (Hint: Indirect materials, indirect labor, utilitites, and maintenance are variable costs. The other budgeted costs are fixed costs.) (Round unit costs to 2 decimal places, e.g. 2.25. List variable costs before fixed costs.)

(1)		122,000 units
(2)		123,000 units
(3)		124,000 units
(4)		125,000 units
(5)		126,000 units

WATERWAYS CORPORATION Manufacturing Overhead Flexible Budget For the Month of March

eTextbook and Media

Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. (List vairble costs before fixed costs.)

WATERWAYS CORPORATION Manufacturing Overhead Flexible Budget Report For the Month of March
	Budget		Actual		Favorable Unfavorable Neither Favorable nor Unfavorable

eTextbook and Media

Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable.

WATERWAYS CORPORATION Responsibility Report Manufacturing Overhead For the Month of March
Controllable Cost	Budget		Actual	Favorable Unfavorable Neither Favorable nor Unfavorable

Answer 1

Overhead budget ( flexible )

Particulars	cost Formulas	122000 Units	123000 Units	124000 Units	125000 Units	126000 Units
Indirect material	0.05q	6100	6150	6200	6250	6300
Indirect labour	0.11q	13420	13530	13640	13750	13860
Utilities	0.1q	12200	12300	12400	12500	12600
Maintainence	0.07q	8540	8610	8680	8750	8820
Salaries	44700	44700	44700	44700	44700	44700
Depreciation	17100	17100	17100	17100	17100	17100
Property tax	3300	3300	3300	3300	3300	3300
Insurance	1300	1300	1300	1300	1300	1300
Janitorial	1400	1400	1400	1400	1400	1400
Budgeted costs	0.33q+67800	108060	108390	108720	109050	109380

Overhead budget report ( flexible )

Particulars	budgeted costs 125000 units	Actual costs 125000	Variance	remarks
Indirect material	6250	6234	16	Favourable
Indirect labour	13750	13723	27	Favourable
Utilities	12500	12530	(30)	Unfavourable
Maintainence	8750	8730	20	Favourable
Salaries	44700	44700	0	-
Depreciation	17100	17100	0	-
Property tax	3300	3300	0	-
Insurance	1300	1300	0	-
Janitorial	1400	1400	0	-
Total costs	109050	109017	33	Favourable

Manufacturing overhead responsible report

Controllable costs	budget costs 125000 units	Actual costs 125000 units	Variance	remarks
Indirect material	6250	6234	16	Favourable
Indirect labour	13750	13723	27	Favourable
Utilities	12500	12530	(30)	Unfavourable
Maintainence	8750	8730	20	Favourable
Total variance costs	41250	41217	33	Favourable