An Internet gourmet foods company, “Yumminess”, will be including “Chocolate Att

Question

An Internet gourmet foods company, “Yumminess”, will be including “Chocolate Attack Brownies” (CAB) in their online catalog. CAB will be sold in square tins and captioned with personal greetings. Jordan negotiated a selling price to Yumminess at $10 per tin.

You, using your accounting knowledge, had previously budgeted a cost of $8 per tin, which includes $6 of direct material and $1.50 of direct labor. Annual manufacturing overhead is estimated at $100,000 for the expected sales of 200,000 tins. Operating expenses are projected to be $80,000 annually.

After looking over the costs for manufacturing overhead and operating expenses, you approximate that 85% of manufacturing overhead and 20% of operating expenses are variable costs.

Jordan wants you to calculate a flexible manufacturing overhead budget assuming an annual level of 230,000 units instead of 200,000.

1. What would be total variable manufacturing overhead costs for this new level? (Round to the nearest dollar.)

2. What would be total fixed manufacturing overhead costs for this new level? (Round to the nearest dollar.)

3. Taylor asks you if flexible budgets can be calculated on a monthly basis. You state, “Of course! Let’s create a monthly manufacturing overhead flexible budget for 20,000 units. Please pass me the brownies!” What would be total variable manufacturing overhead costs for this new level?(Round to the nearest dollar.)

4. Taylor asks you if flexible budgets can be calculated on a monthly basis. You state, “Of course! Let’s create a monthly manufacturing overhead flexible budget for 20,000 units. Please pass me the brownies!” What would be total fixed manufacturing overhead costs for this new level?(Round to the nearest dollar.)

5. Given an annual master budget of 200,000 units with actual production of 210,000 units, you have been tasked to formulate a flexible budget report. What will be total manufacturing overhead costs at the budget level?

Explanation / Answer

New Level 230000 units Total manufacturing cost per unit 0.5 100000/200000 Variable Manufacturing cost 85% 0.425 Fixed maufacturing overhead 100000*15% 15000 Ans a Total variable manufacturing overhead 230000*$.425 97750 Ans b Fixed manufacturing overhead will be same 15000 Ans c Total variable manufacturing cost 20000*.425 8500 Ans d Total manufacturng fixed cost 1250 15000/12 months Ans e Level of activity 210000 Total manufacturing Overhead Total variable manufacturing overhead (210000*.425) 89250 Fixed maufacturing overhead(210000*(..5-.425) 15750 Total manufacturing Overhead 105000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.