Company made the budget for the year 2013 costs. Sales 300,000 units Production

ID: 2375756 • Letter: C

Question

Company made the budget for the year 2013 costs.

Sales 300,000 units

Production 350,000 units

Costs:

Direct material $5.00 per unit

Direct labor $8.00 per unit

Variable overhead $4.00 per unit

Fixed overhead $350,000 total

Variable selling cost $2.00 per unit

Fixed selling cost $600,000 total

During the year, company actual production = 300,000 units and actual sales = 280,000 units

1. Prepare the following flexible budgets for actual levels of activity

2. Calculate total direct material cost

3. Calculate Total direct labor cost

4. Calculate Total variable overhead cost

5. Calculate Fixed overhead cost

6. Calculate Total variable selling cost

2. The following are the actual costs for 2013. For each item, determine if the company did favorably (F) or unfavorably (U).

a. Total direct material cost = $1.48 million

b. Total direct labor cost = $2.45 million

c. Total variable overhead = $1.16 million

d. Total fixed overhead = $360,000

e. Total variable selling cost = $575,000

1. Flexible budget:

Direct material cost = 300,000*5 = 1,500,000

Direct labor cost = 300,000*8 = 2,400,000

Variable overhead cost = 300,000*4 = 1,200,000

Fixed overhead cost = 350,000

Variable selling cost = 280,000*2 = 560,000

2. Variances:

Direct material cost - Favorable

Direct labor cost - Unfavorable

Variable overhead - Favorable

Fixed overhead - Unfavorable

Variable selling cost - Unfavorable

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