Question

E9-2 (Algo) Preparing Flexible Budget for Manufacturing Costs [LO 9-2] Olive Company makes silver belt buckles. The company's master budget appears in the first column of the table. Required: Complete the table by preparing Olive's flexible budget for 5.000. 7,000 and 8,000 units. (Round your intermediate calculations to 2 decimal places.) Master Budget Flexible Budget Flexible Budget Flexible Budget 16,000 Units) (5,000 Units) (7.000 Units) (8.000 Units) Direct materials Direct labor Variable manufacturing overhead Fored manufacturing overhead Total manufacturing cost 1.200 3,600 1,800 17,200 23,800 $

Answer 1

Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost Master Budget Flexible Budget (6,000 units) (5,000 units) 1,200 $ 1,000 3,600 3,000 1,800 1,500 17,200 17,200 23,800 $ 22,700 Flexible Budget (7,000 units) $ 1,400 4,200 2,100 17,200 $ 24,900 Flexible Budget (8,000 units) $ 1,600 4,800 2,400 17,200 $ 26,000 Working Notes Cost of variable cost per unit Direct material ($ 1,200 / 6,000) Direct labor ($ 3,600 / 6,000) Variable manufacturing overhead ($ 1,800 / 6,000) $ 0.20 0.60 0.30 5,000 8,000 Units (a) Direct material (a x $ 0.20) Direct labor (a x $ 0.60) Variable manufacutring overhead (a x $ 0.30) Flexible Budget (units) 7,000 1,000 $ 1,400 $ 3,000 $ 4,200 $ 1,500 $ 2,100 $ 1,600 4,800 2,400 *Fixed costs will remain the same irrespective of the units