Hello, I am working on the assignment below, but I am unsure of how to solve it.
ID: 2395532 • Letter: H
Question
Hello, I am working on the assignment below, but I am unsure of how to solve it. I would be very grateful for help in solving this assignment.
1. Gundy Company expects to produce 1,242,000 units of Product XX in 2017. Monthly production is expected to range from 72,700 to 109,700 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $7, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $3.
In March 2017, the company incurs the following costs in producing 91,200 units: direct materials $392,800, direct labor $634,400, and variable overhead $915,000. Actual fixed costs were equal to budgeted fixed costs.
Prepare a flexible budget report for March. (List variable costs before fixed costs.)
2. Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.
GUNDY COMPANYManufacturing Flexible Budget Report
For the Month Ended March 31, 2017 Difference Budget Actual Favorable
Unfavorable
Neither Favorable
nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced $ $ $ FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced $ $ $ FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect LaborDirect MaterialsFixed CostsOverheadSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable CostsUnits Produced $ $ $ FavorableUnfavorableNeither Favorable nor Unfavorable
Explanation / Answer
Answers
Under Flexible Budget, Variable costs are changes on the basis of Budget as per actual level of activity while fixed cost remains as budgeted.
Flexible Budget Report, as asked:
UNDY COMPANY
Manufacturing Flexible Budget Report
For the Month Ended March 31, 2017
Difference
Budget
Actual
Amount
Favorable/Unfavorable/Neither Favorable nor Unfavourable
Units Produced
91200
91200
Neither Favorable nor Unfavorable
Variable Costs:
Direct Labor
$ 638,400.00
$ 634,400.00
$ 4,000.00
Favorable
Direct Materials
$ 364,800.00
$ 392,800.00
$ (28,000.00)
Unfavorable
Overhead
$ 912,000.00
$ 915,000.00
$ (3,000.00)
Unfavorable
Total Variable Costs
$ 1,915,200.00
$ 1,942,200.00
$ (27,000.00)
Unfavorable
Fixed Costs
Depreciation
$ 414,000.00
$ 414,000.00
$ -
Neither Favorable nor Unfavorable
Supervision
$ 310,500.00
$ 310,500.00
$ -
Neither Favorable nor Unfavorable
Total Fixed Costs
$ 724,500.00
$ 724,500.00
$ -
Neither Favorable nor Unfavorable
Total Costs
$ 2,639,700.00
$ 2,666,700.00
$ (27,000.00)
Unfavorable
Working:
UNDY COMPANY
Manufacturing Flexible Budget Report
For the Month Ended March 31, 2017
Difference
Budget
Actual
Amount
Favorable/Unfavorable/Neither Favorable nor Unfavourable
[A]
[B]
[C = A – B]
Units Produced
91200
91200
[C = A – B]
Neither Favorable nor Unfavorable
Variable Costs:
[C = A – B]
Direct Labor
=91200*7
634400
[C = A – B]
Favorable
[C = A – B]
Direct Materials
=91200*4
392800
[C = A – B]
Unfavorable
Overhead
=91200*10
915000
[C = A – B]
Unfavorable
Total Variable Costs
TOtal
Total
[C = A – B]
Unfavorable
[C = A – B]
Fixed Costs
[C = A – B]
Depreciation
=+(1242000/12)*4
414000
[C = A – B]
Neither Favorable nor Unfavorable
Supervision
=+(1242000/12)*3
310500
[C = A – B]
Neither Favorable nor Unfavorable
Total Fixed Costs
TOtal
TOtal
[C = A – B]
Neither Favorable nor Unfavorable
Total Costs
Grand total
Grand total
[C = A – B]
Unfavorable
Working for Standard data for Actual output
Actual DATA for
260
units
Quantity (AQ)
Rate (AR)
Actual Cost
Direct Material
2400
$ 2.600
$ 6,240.00
Direct labor
1310
$ 11.80
$ 15,458.00
Standard DATA for
260
units
Quantity (SQ)
Rate (SR)
Standard Cost
Direct Material
2080
$ 2.40
$ 4,992.00
Direct labor
1300
$ 12.00
$ 15,600.00
Note: Spending Variance = Total Variance (Material or Labor)
All variances asked, including calculations:
Material Price Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Quantity
(
$ 2.40
-
$ 2.60
)
x
2400
-480
Variance
$ 480.00
Unfavourable-U
Material Quantity Variance
(
Standard Quantity
-
Actual Quantity
)
x
Standard Rate
(
2080
-
2400
)
x
$ 2.40
-768
Variance
$ 768.00
Unfavourable-U
Material Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 4,992.00
-
$ 6,240.00
)
-1248
Variance
$ 1,248.00
Unfavourable-U
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 12.00
-
$ 11.80
)
x
1310
262
Variance
$ 262.00
Favourable-F
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
1300
-
1310
)
x
$ 12.00
-120
Variance
$ 120.00
Unfavourable-U
Labor Spending Variance
(
Standard Cost
-
Actual Cost
)
(
$ 15,600.00
-
$ 15,458.00
)
142
Variance
$ 142.00
Favourable-F
UNDY COMPANY
Manufacturing Flexible Budget Report
For the Month Ended March 31, 2017
Difference
Budget
Actual
Amount
Favorable/Unfavorable/Neither Favorable nor Unfavourable
Units Produced
91200
91200
Neither Favorable nor Unfavorable
Variable Costs:
Direct Labor
$ 638,400.00
$ 634,400.00
$ 4,000.00
Favorable
Direct Materials
$ 364,800.00
$ 392,800.00
$ (28,000.00)
Unfavorable
Overhead
$ 912,000.00
$ 915,000.00
$ (3,000.00)
Unfavorable
Total Variable Costs
$ 1,915,200.00
$ 1,942,200.00
$ (27,000.00)
Unfavorable
Fixed Costs
Depreciation
$ 414,000.00
$ 414,000.00
$ -
Neither Favorable nor Unfavorable
Supervision
$ 310,500.00
$ 310,500.00
$ -
Neither Favorable nor Unfavorable
Total Fixed Costs
$ 724,500.00
$ 724,500.00
$ -
Neither Favorable nor Unfavorable
Total Costs
$ 2,639,700.00
$ 2,666,700.00
$ (27,000.00)
Unfavorable
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