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 114,000 Budgeted costs Indirect materials $5.700 Indirect labor 13.680 Utilities 11.400 Maintenance 6,840 Salaries 45,500 Depreciation 15.900 Property taxes 3.000 Insurance 1,100 Janitorial 1.700 Total budgeted costs $104.820 WATERWAYS CORPORATION Manufacturing Overhead Costs (Actual) For the Month of March Production in units 115.000 Costs Indirect materials $5.735 Indirect labor 13.773 Utilities 11,530 Maintenance 6,878 Salaries 45,500 Depreciation 15.900 Property taxes 3,000 Insurance 1,100 Janitorial 1,700 Total costs $105,116 Waterways produced 115,000 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 varlable costs before fixed costs.) (1) 112.000 units (2) 113.000 units (3) 114.000 units (4) 115.000 units (5) 116,000 units

Answer 1

A F Computation of cost per unit Computation -5700/114000 - 13680/ 114000 - 11400/114000 -6840/ 114000 1 Rate 2 Particulars 3 Indirect materials 0.05 4 Indirect labour S 0.12 5 Utilities 0.10 6 Maitainence S 0.06 7 Waterways Corporation 8 Manufacturing Overhead Flexible Budget 9 For the month of March 10 114000 Production in units 112000 113000 115000 116000 11 12 Variable costs 13 Indirect materials (0.05) 14 Indirect labor(0.12) 15 Utilities(0.10) 16 Maintenance(0.06) 5,650 S 13,560 S 11,300 S 6,780 S 36,960 37,290 $ 37,620 $ 5,700 S 13,680 S 11,400 S 6,840 S 5,600 13,440 S 11,200 S 6,720 S 5,750 13,800 S 11,500 S 6,900 S 37,950 $ S 5,800 13,920 11,600 S S S 6,960 17 Total variable costs 38,280 18 Fixed costs 45,500 S 15,900 S 3,000 S 1,100 1,700 S 67,200 S 1,04,160 $1,04,4901,04,820 $ 45,500 $ 15,900 S 3,000 S 1,100 S 1,700 S 67,200 S 1,05,150 $1,05,480 45,500 S 15,900 S 3,000 S 1,100 S 1,700 S 19 Salaries S 45,500 45,500 20 Depreciation 15,900 S 3,000 S 1,100 S S 15,900 21 Property taxes S 3,000 22 Insurance S 1,100 23 Janitorial S 1,700 1,700 67,200 S 67,200 S 24 Total fixed costs S 67,200 25 Total budgeted costs

E Manufacturing Overhead Flexible Budget Report 28 For the month of March 29 Budget Actual 30 115000 Production in units 115000 31 32 Variable costs 5,750 S 13,800 S 11,500 6,900 S 37,950 S 37,916 5,735 13,773 11,530 15 favorable 33 Indirect materials S 27 favorable 34 Indirect labor 35 Utilities S 30 Unfavorable 36 Maintenance 6,878 22 favorable 34 favorable 37 Total variable costs 38 Fixed costs 45,500 S 15,900 S 3,000 S 1,100 1,700 S 67,200 1,05,150 $1,05,116 39 Salaries S 45,500 0 Neither favorable nor unfavorable 0Neither favorable nor unfavorable 0Neither favorable nor unfavorable 0Neither favorable nor unfavorable 0Neither favorable nor unfavorable 0Neither favorable nor unfavorable 40 Depreciation S 15,900 41 Property taxes S 3,000 1,100 42 Insurance S 43 Janitorial S 1,700 67,200 44 Total fixed costs 45 Total budgeted costs 34 favorable

A C E Waterways Corporation Responsibility Report 47 48 Manufacturing overhead 49 For the month of March 50 5,750 S 13,800 S 5,735 15 favorable 51 Indirect materials 27 favorable 52 Indirect labor 13,773 53 Utilities S 11,500 11,530 6,878 30 Unfavorable 6,900 S 22 favorable 54 Maintenance S 37,950 37,916 55 Total variable costs 34 favorable 56.

A В E F Computation of cost per unit Computation 5700/114000 - 13680/ 114000 1 Rate =5700/114000 = 13680/114000 = 11400 /114000 -6840/ 114000 2 Particulars 3 Indirect materials 4 Indirect labour 5 Utilities 11400 / 114000 6840/114000 6 Maitainence 7 Waterways Corporation 8 Manufacturing Overhead Flexible Budget 9 For the month of March, 10 112000 114000 115000 Production in units 113000 116000 11 12 Variable costs 13 Indirect materials (0.05) 14 Indirect labor(0.12) 15 Utilities(0.10) 16 Maintenance(0.06) -+B11*0.05 -+B11*0.12 +D11*0,05 =+C11*0.05 =+E11*0.05 -+E11*0.12 +E11*0.1 +F11*0.05 -+F11*0.12 =+D11*0.12 +D11 *0.1 =+C11*0.12 +B11*0.1 =+C11*0.1 +C11*D6 =+F11*D5 +F11*D6 =+E11*D6 =+D11*D6 +B11 *D6 |=SUM(C13:C16)-SUM(D13:D16) -SUM(E13:E16) -SUM(F13:F16) =SUM(B13:B16) 17 Total variable costs 18 Fixed costs 45500 45500 45500 45500 19 Salaries 45500 20 Depreciation 21 Property taxes 15900 3000 1100 15900 15900 15900 15900 3000 1100 1700 3000 3000 3000 1100 1700 22 Insurance 1100 1100 1700 23 Janitorial 1700 1700 |-SUM(D19:D23) =SUM(B19-B23) +B17+B24 -SUM(C19:C23) +C17+C24 |-SUM(E19E23) +E17+E24 -SUM(F19:F23) =+F17+F24 24 Total fixed costs -+D17+D24 25 Total budgeted costs 16

В C E Manufacturing Overhead Flexible Budget Report 28 For the month of March 29 Budget 115000 Actual 30 115000 Production in units 31 32 Variable costs: =+B33-C33 +B34-C34 --С35-В35 favorable 5735 33 Indirect materials 5750 34 Indirect labor 13800 11500 favorable Unfavorable 13773 35 Utilities 11530 6878 +B36-C36 favorable 36 Maintenance 6900 SUM(B33:B36 ) 37 Total variable costs ESUM(C33:C36) |-+в37-С37 favorable 38 Fixed costs 45500 Neither favorable Neither favorable Neither favorable Neither favorable 45500 39 Salaries 0 40 Depreciation 15900 3000 15900 0 3000 41 Property taxes 42 Insurance 1100 1100 Neither favorable 1700 43 Janitorial 1700 |-SUM(B39:B43) +B37+B44 |=SUM(C39:C43) -+C37+C44 44 Total fixed costs Neither favorable favorable 0 45 Total budgeted costs =+B45-C45

A В C E Waterways Corporation 47 Responsibility Report 48 Manufacturing overhead 49 For the month of March 50 5735 +B51-C51 +B52-C52 -C53-B53 =+B54-C54 5750 favorable 51 Indirect materials 13800 13773 favorable 52 Indirect labor 11500 Unfavorable 53 Utilities 11530 favorable 54 Maintenance 6900 6878 favorable =SUM (B51:B54) SUM(C51:C54)+B55-C55 55 Total variable costs