Hill Company uses budgets in controlling costs. The August 2014 budget report fo

Question

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 Favorable F Unfavorable U Neither Favorable nor Unfavorable N Manufacturing Costs Bud Actual Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance $52,700 $51,600 60,760 57,980 30,380 30,660 22,320 21,910 19,720 7,580 193,440 189,450 $1,100 F 2,780 F 280 U 410 F 120 F 140 U 3,990 F 19,840 7,440 Total variable Fixed costs Rent Supervision Depreciation 13,000 16,590 7,040 36,630 $230,070 $226,080 13,000 16,590 7,040 36,630 -0-N -0-N 0- N Total fixed Total costs $3,990 F The monthly budget amounts in the report were based on an expected production of 62,000 units per month or 744,000 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 60,000 units were produced (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula - + variable costs of $ per unit.

Explanation / Answer

Part A)

The total monthly budgeted cost formula can be derived as follows:

The formula = $36,630 (Fixed Cost) + Variable Cost of $3.12 (193,440/62,000) per unit

____________

Part B)

____________

Part C)

Hill Company Assembling Department Flexible Budget Report For the Month Ended August 31, 2014 Budget at 60,000 Units Actual Costs at 60,000 Units Difference Variable Costs Direct materials (52,700/62,000*60,000) 51,000 51,600 600 U Direct labor (60,760/62,000*60,000) 58,800 57,980 820 F Indirect materials (30,380/62,000*60,000) 29,400 30,660 1,260 U Indirect labor (22,320/62,000*60,000) 21,600 21,910 310 U Utilities (19,840/62,000*60,000) 19,200 19,720 520 U Maintenance (7,440/62,000*60,000) 7,200 7,580 380 U Total Variable Costs 187,200 189,450 2,250 U Fixed Costs Rent 13,000 13,000 0 Supervision 16,590 16,590 0 Depreciation 7,040 7,040 0 Total Fixed Costs 36,630 36,630 0 Total Costs $223,830 $226,080 $2,250 U

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