Centron, Inc., has the following budgeted production costs: Direct materials $0.
ID: 2376793 • Letter: C
Question
Centron, Inc., has the following budgeted production costs:
Direct materials
$0.40 per unit
Direct labor
1.80 per unit
Variable factory overhead
2.20 per unit
Fixed factory overhead
Supervision
$24,000
Maintenance
18,000
Other
12,000
The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed 25,000 units, maintenance and other fixed costs are expected to increase by $6,000 and $4,500, respectively.
During the recent quarter ended March 31, Centron produced 25,500 units and incurred the following costs:
Direct Materials
$10,710
Direct Labor
47,175
Variable factory overhead
51,940
Fixed factory overhead
Supervision
24,500
Maintenance
23,700
Other
16,800
Total production costs
$174,825
Instructions:
a. Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activity.
b. Was Centron's experience in the quarter cited better or worse than anticipated? Prepare an appropriate performance report and explain your answer.
c. Explain the benefit of using flexible budgets (as opposed to static budgets) in the measurement of performance.
Direct materials
$0.40 per unit
Direct labor
1.80 per unit
Variable factory overhead
2.20 per unit
Fixed factory overhead
Supervision
$24,000
Maintenance
18,000
Other
12,000
Explanation / Answer
Here is the dropbox link for your answer. To show all calculations and work, it was easier to post it in excel spreadsheet.
https://www.dropbox.com/s/idm5iayk285wqtv/Queendivadoll.xlsx
If you have any problems in downloading the file, give me your email I will email you the file.
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