Problem 22-3A HILL COMPANY Budget Report Assembling Department For the Month End

Question

Problem 22-3A

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)

$57,200

$56,200

$1,000

61,750

58,370

3,380

32,500

32,790

290

19,500

19,030

470

22,750

22,560

190

9,750

10,210

460

203,450

199,160

4,290

10,710

10,710

–0–

18,630

18,630

–0–

6,040

6,040

–0–

35,380

35,380

–0–

$238,830

$234,540

$4,290

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HILL COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended August 31, 2012

Difference

Budget

Actual Costs

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

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HILL COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended August 31, 2014

Difference

Budget

Actual Costs

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

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Problem 22-3A

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

$57,200

$56,200

$1,000

F    Direct labor

61,750

58,370

3,380

F    Indirect materials

32,500

32,790

290

U    Indirect labor

19,500

19,030

470

F    Utilities

22,750

22,560

190

F    Maintenance

9,750

10,210

460

U       Total variable

203,450

199,160

4,290

F Fixed costs    Rent

10,710

10,710

–0–

N    Supervision

18,630

18,630

–0–

N    Depreciation

6,040

6,040

–0–

N       Total fixed

35,380

35,380

–0–

N Total costs

$238,830

$234,540

$4,290

F
The monthly budget amounts in the report were based on an expected production of 65,000 units per month or 780,000 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 63,000 units were produced.

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   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.

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   Prepare a budget report for August using flexible budget data. (List variable costs before fixed costs.)

HILL COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended August 31, 2012

Difference

Budget

Actual Costs

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

$

$

$

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

$

$

$

FUN

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   In September, 69,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (List variable costs before fixed costs.)

HILL COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended August 31, 2014

Difference

Budget

Actual Costs

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

$

$

$

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

    Depreciation    Direct Labor    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Maintenance    Rent    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Units    Utilities    Variable Costs    

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

FUN

DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs

$

$

$

FUN

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Explanation / Answer

Part A)

The monthly budgeted cost formula is given below:

Cost Formula = $35,380 + Variable Cost of 3.13* Per Unit (where variable cost per unit is calculated as 203,450/65,000)

_______

Part B)

The budget report for August is given below:

_______

Part C)

The budget report for September is given below:

HILL COMPANY Assembling department Flexible budget Report For the Month Ended August 31, 2012 Difference Budget at Actual Costs Favorable F Units 63,000 units 63,000 units Unfavorable U Variable costs Direct materials $55,440 $56,200 $760 U Direct labor 59,850 58,370 $1,480 F Indirect materials 31,500 32,790 $1,290 U Indirect labor 18,900 19,030 $130 U Utilities 22,050 22,560 $510 U Maintenance 9,450 10,210 $760 U Total variable 197,190 199,160 1,970 U Fixed costs Rent 10,710 10,710 0 U Supervision 18,630 18,630 0 U Depreciation 6,040 6,040 0 U Total fixed 35,380 35,380 0 U U Total costs $232,570 $234,540 $1,970 U

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