Hannon Company expects to produce 1,200,000 units of Product XX in 2010. Monthly
ID: 2386797 • Letter: H
Question
Hannon Company expects to produce 1,200,000 units of Product XX in 2010. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. Complete the flexible manufacturing budget for the relevant range value using 20,000 unit increments.HANNON COMPANY
Monthly Flexible Manufacturing Budget
For the Year 2010
Activity level
Finished goods
Variable costs
Direct materials $ $ $
Direct labor
Overhead
Total variable costs
$
$
$
Fixed costs
Depreciation
Supervision
Total fixed costs
Total costs
$
$
$
Explanation / Answer
ACTIVITY LEVEL
Finished units
80000
100000
120000
Variable costs
Direct materaial
320000
400000
480000
Direct labor
480000
600000
720000
overhead
640000
800000
960000
Total variable cost
1440000
1800000
2160000
Fixed cost
depreciattion
200000
200000
200000
supervision
100000
100000
100000
total
300000
300000
300000
Total cost
$1740000
$2,100000
$2,460,000
ACTIVITY LEVEL
Finished units
80000
100000
120000
Variable costs
Direct materaial
320000
400000
480000
Direct labor
480000
600000
720000
overhead
640000
800000
960000
Total variable cost
1440000
1800000
2160000
Fixed cost
depreciattion
200000
200000
200000
supervision
100000
100000
100000
total
300000
300000
300000
Total cost
$1740000
$2,100000
$2,460,000
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