Question

The monthly budget amounts in the report were based on an expected production of 63,000 units per month or 756,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 61,000 units were produced (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula is s + variable costs of $ per unit. (b) Prepare a budget report for August using flexible budget data. (List variable costs before fixed costs.) VAUGHN COMPANY Assembling Department Flexible Budget Report For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs In September, 67,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (List variable costs before fixed costs. VAUGHN COMPANY Assembling Department Flexible Budget Report For the Month Ended September 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs

Answer 1

	Variable cost per unit = 195300/63000
			3.1
a)	the Formula is
	$33,900	+	variable cost of		$3.10	per unit
b)			Flexible budget
				Budget	Actual	Difference
	Activity level			61,000	61000
	Variable costs
	Direct materials		0.86	52460	53,080	620	U
	direct labor		0.96	58560	57,080	1,480	F
	indirect materials		0.48	29280	30,440	1,160	U
	indirect labor		0.34	20740	21,020	280	U
	Utilities		0.3	18300	18,800	500	U
	Maintenance		0.16	9760	10,440	680	U
	total variable costs		3.1	189100	190,860	1,760	U
	Fixed cost
	Rent			11,100	11,100	0	N
	supervision			16,000	16,000	0	N
	Depreciation			6,800	6,800	0	N
	total fixed cost			33,900	33,900	0	N
	total cost			223,000	224,760	1,760	U
c)			Flexible budget
				Budget	Actual	Difference
	Activity level			67,000	67000
	Variable costs
	Direct materials		0.86	57620	58,388	768	U
	direct labor		0.96	64320	62,788	1,532	F
	indirect materials		0.48	32160	33,484	1,324	U
	indirect labor		0.34	22780	23,122	342	U
	Utilities		0.3	20100	20,680	580	U
	Maintenance		0.16	10720	11,484	764	U
	total variable costs		3.1	207700	209,946	2,246	U
	Fixed cost
	Rent			11,100	11,100	0	N
	supervision			16,000	16,000	0	N
	Depreciation			6,800	6,800	0	N
	total fixed cost			33,900	33,900	0	N
	total cost			241,600	243,846	2,246	U