Waterways Waterways Corporation is continuing its budget preparations. Waterways
ID: 2404600 • Letter: W
Question
Waterways
Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and actual overhead for March. (Refer to Waterways 9 if you are uncertain about variable versus fixed costs.)
Waterways Corporation Waterways Corporation
Manufacturing Overhead Budget Manufacturing Overhead Costs (Actual)
(Static) For the Month of March For the Month of March
Budgeted Production (Units)
118,000
Production in units
118,500
Indirect materials
$ 5,900
Indirect materials
$ 5,910
Indirect labor
14,160
Indirect labor
14,195
Utilities
11,800
Utilities
11,880
Maintenance
8,260
Maintenance
8,275
Salaries
42,000
Salaries
42,100
Depreciation
16,800
Depreciation
16,800
Property taxes
3,000
Property taxes
3,000
Insurance
1,200
Insurance
1,200
Janitorial
1,500
Janitorial
1,650
Total budgeted costs
$104,620
Total costs
$105,010
Waterways produced 118,500 units in March rather than the budgeted number of units.
Instructions:
a. Prepare a flexible budget overhead budget based on the following amounts produced.
(1) 115,000 units
(2) 116,000 units
(3) 117,000 units
(4) 118,000 units
(5) 119,000 units
b. Prepare a flexible budget performance report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March.
c. Prepare a responsibility report for the manufacturing overhead for March assuming only variable costs are controllable.
Budgeted Production (Units)
118,000
Production in units
118,500
Indirect materials
$ 5,900
Indirect materials
$ 5,910
Indirect labor
14,160
Indirect labor
14,195
Utilities
11,800
Utilities
11,880
Maintenance
8,260
Maintenance
8,275
Salaries
42,000
Salaries
42,100
Depreciation
16,800
Depreciation
16,800
Property taxes
3,000
Property taxes
3,000
Insurance
1,200
Insurance
1,200
Janitorial
1,500
Janitorial
1,650
Total budgeted costs
$104,620
Total costs
$105,010
Explanation / Answer
a) Water Way Corporation Manufacturing Overhead Flexible Budget Prodution Unit Production in Unit Per Unit Cost 118000 115000 116000 117000 118500 119000 Variable Cost Indirect Materal $0.05 $5,900 $5,750 $5,800 $5,850 $5,925 $5,950 Indirect Labour $0.12 $14,160 $13,800 $13,920 $14,040 $14,220 $14,280 Utilities $0.10 $11,800 $11,500 $11,600 $11,700 $11,850 $11,900 Maintainance $0.07 $8,260 $8,050 $8,120 $8,190 $8,295 $8,330 Fixed Cost Salaries $42,100 $42,100 $42,100 $42,100 $42,100 $42,100 Depreciation $16,800 $16,800 $16,800 $16,800 $16,800 $16,800 Property Tax $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 Insurance $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 Janitorial $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 Total Budgeted Cost $1,04,870 $1,03,850 $1,04,190 $1,04,530 $1,05,040 $1,05,210 b) Water Way Corporation Manufacturing Overhead Flexible Budget Report Budget Actual Difference Production in Unit 118500 118500 Variable Cost Indirect Materal $5,925 $5,910 $15 F Indirect Labour $14,220 $14,195 $25 F Utilities $11,850 $11,880 -$30 U Maintainance $8,295 $8,275 $20 F Fixed Cost Salaries $42,100 $42,100 $0 Depreciation $16,800 $16,800 $0 Property Tax $3,000 $3,000 $0 Insurance $1,200 $1,200 $0 Janitorial $1,650 $1,650 $0 Total Budgeted Cost $1,05,040 $1,05,010 $30 F Waterway Corporation Responsibility Report Manufacturing Overhead Controllable Cost Budget Actual Difference Indirect Materal $5,925 $5,910 $15 F Indirect Labour $14,220 $14,195 $25 F Utilities $11,850 $11,880 -$30 U Maintainance $8,295 $8,275 $20 F $40,290 $40,260 $30 F
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