Question

Could you do it step by step and explaining where you got the numbers please.

Waterways (This is a continuation of the Waterways case from Chapters 1 -9.) WP10 Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and actual overhead costs for March. WATERWAYS CORPORATION Manufacturing Overhead Costs (Actual) For the Month of March WATERWAYS CORPORATION Manufacturing Overhead Budget (Static) For the Month of March Budgeted production in units 117500 Production in units Budgeted costs 118,500 Costs Indirect materials Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance Janitorial 5,875 14,100 11,750 8,225 42,000 16,800 3,000 1,200 1,500 Indirect materials Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance Janitorial 5,910 14,195 11,880 8,275 42,000 16,800 3,000 1,200 1,500 $104.760 104,450Total costs Total budgeted costs Waterways produced 118,500 units in March rather than the budgeted number of units. Instructions (a) Prepare a flexible overhead budget based on the following amounts produced. (Hint Indirect materials, indirect labor, utilities, and maintenance are variable costs. The other budgeted costs are fixed costs.) 5,500 units (2) 116,500 units (3) 117,500 units (4) 118,500 units (5) 119,500 units (b) Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March (c) Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable

Answer 1

a.

Waterways Corporation Flexible Overhead Budget
Activity Level	Cost per Unit	Total Cost	115,500 units	116,500 units	117,500 units	118,500 units	119,500 units
Variable Overhead Costs
Indirect Materials	$ 0.05		$ 5,775	$ 5,825	$ 5,875	$ 5,925	$ 5,975
Indirect Labor	0.12		13,860	13,980	14,100	14,220	14,340
Utilities	0.10		11,550	11,650	11,750	11,850	11,950
Maintenance	0.07		8,085	8,155	8,225	8,295	8,365
Total Variable Overhead Costs	$ 0.34		$ 39,270	$ 39,610	$ 39,950	$ 40,290	$ 40,630
Fixed Overhead Costs
Salaries		42,000	42,000	42,000	42,000	42,000	42,000
Depreciation		16,800	16,800	16,800	16,800	16,800	16,800
Property Taxes		3,000	3,000	3,000	3,000	3,000	3,000
Insurance		1,200	1,200	1,200	1,200	1,200	1,200
Janitorial		1,500	1,500	1,500	1,500	1,500	1,500
Total Fixed Cost		64,500	64,500	64,500	64,500	64,500	64,500
Total Budgeted Overhead Cost			$ 103,770	$ 104,110	$ 104,450	$ 104,790	$ 105,130

b.

Waterways Corporation Flexible Overhead Budget Performance Report For the month ended March 31
	Flexible Budget	Actual Results	Spending Variances
Activity Level	118,500 units	118,500 units
Variable Overhead Costs
Indirect Materials	$ 5,925	$ 5,910	$ 15 F
Indirect Labor	14,220	14,195	25 F
Utilities	11,850	11,880	30 U
Maintenance	8,295	8,275	20 F
Total Variable Costs	$ 40,290	$ 40,260	$ 30 F
Fixed Overhead Costs
Salaries	42,000	42,000	None
Depreciation	16,800	16,800	None
Property Taxes	3,000	3,000	None
Insurance	1,200	1,200	None
Janitorial	1,500	1,500	None
Total Fixed Costs	$ 64,500	$ 64,500	None
Total Overhead Cost	$ 104,790	$ 104,760	$ 30 F