Question

Gundy Company expects to produce 1,220,400 units of Product XX in 2020. Monthly production is expected to range from 81,000 to 129,000 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $7, and overhead $9. Budgeted fixed manufacturing costs per unit for depreciation are $5 and for supervision are $2.

In March 2020, the company incurs the following costs in producing 105,000 units: direct materials $447,000, direct labor $731,000, and variable overhead $953,000. Actual fixed costs were equal to budgeted fixed costs.

Prepare a flexible budget report for March. (List variable costs before fixed costs.)

Answer 1

- X for budget A B C D E flexible budget report for march 2020 budget actual difference Favourable / Unfavourable 105,000 105,000 units produced variable costs direct material direct labor overhead total variable costs fixed costs depreciation supervision total fixed costs total costs $ 420,000 $ 447,000 $ 735,000 $ 731,000 $ 945,000 $ 953,000 $2,100,000 $ 2,131,000 $27,000 $4,000 $8,000 $ 31,000 Unfavourable Favourable Unfavourable Unfavourable Neither Favourable Nor Unfavourable $ 508,500 $ 203,400 $ 711,900 $ 2,811,900 $ 508,500 $ 203,400 $ 711,900 $2,842,900 $ 0 $0 $0 $ 31,000 Unfavourable

for formulas and calculations, refer to the image below -

1 x fc budget B C D E G flexible budget report for march 2020 1 budget actual difference Favourable / Unfavourable units produced 105000 105000 variable costs direct material =C4*4 447000 =D6-C6 Unfavourable direct labor =C4*7 731000 =C7-D7 Favourable overhead =C4*9 953000 =D8-C8 Unfavourable total variable costs =SUM(C6:08) =SUM(D6:08) =D9-C9 Unfavourable fixed costs depreciation =1220400*5/12 =C11 =D11-C11 Neither Favourable Nor Unfavourable supervision =1220400*2/12 =C12 =D12-C12 total fixed costs =SUM(C11:C12) I=SUM(D11:012) I=D13-C13 total costs =C9+C13 =D9+D13 =D14-C14 Unfavourable

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