Problem 22-3A (part level submission) Hill Company uses budgets in controlling c

Question

Problem 22-3A (part level submission)

Hill Company uses budgets in controlling costs. The August 2014 budget report for the company’s Assembling Department is as follows.

HILL COMPANY
Budget Report
Assembling Department
For the Month Ended August 31, 2014
Difference
Manufacturing Costs
Budget
Actual
Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)
Variable costs
   Direct materials
$56,960
$55,860
$1,100
F
   Direct labor
57,600
54,700
2,900
F
   Indirect materials
31,360
31,500
140
U
   Indirect labor
19,200
18,740
460
F
   Utilities
16,000
15,810
190
F
   Maintenance
12,160
12,330
170
U
      Total variable
193,280
188,940
4,340
F
Fixed costs
   Rent
12,140
12,140
–0–
N
   Supervision
18,970
18,970
–0–
N
   Depreciation
5,780
5,780
–0–
N
      Total fixed
36,890
36,890
–0–
N
Total costs
$230,170
$225,830
$4,340
F

The monthly budget amounts in the report were based on an expected production of 64,000 units per month or 768,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 62,000 units were produced.

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(a)

[Incorrect answer.] Your answer is incorrect. Try again.

State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.)

The formula = $ [Entry field with incorrect answer] 3.02 (x) + variable costs of $ [Entry field with incorrect answer] 36,890 per unit.

{C}

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Explanation / Answer

The total monthly budgeted cost formula is:

Direct / Variable costs + Indirect / Fixed costs = Budgeted cost

Budgeted cost = (193,280 / 62,000) X + 36,890 = Total budgeted cost at that X level

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