Wade Company estimates that it will produce 6,400 units of product IOA during th

Question

Wade Company estimates that it will produce 6,400 units of product IOA during the current month. Budgeted variable manufacturing costs per unit are direct materials $6, direct labor $11, and overhead $19. Monthly budgeted fixed manufacturing overhead costs are $8,500 for depreciation and $4,000 for supervision.

In the current month, Wade actually produced 6,900 units and incurred the following costs: direct materials $35,900, direct labor $69,000, variable overhead $129,600, depreciation $8,500, and supervision $4,200.

Prepare a static budget report. Hint: The Budget column is based on estimated production while the Actual column is the actual cost incurred during the period. (List variable costs before fixed costs.)

Wade Company
Static Budget Report
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs
$
$
$

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Depreciation
Direct Labor
Direct Materials
Fixed Costs
Overhead
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units Produced
Variable Costs
$
$
$

Favorable
Unfavorable
Neither Favorable nor Unfavorable

Were costs controlled?

Yes
No

Explanation / Answer

Wade Company (All costs in $) Static Budget Report Particulars Budgeted Actual Variance Type No. of units 6400 6900 -500 Favourable Direct Material Costs 38400 35900 2500 Favourable Direct Labor Costs 70400 69000 1400 Favourable Variable Overheads 121600 129600 -8000 Favourable Fixed Overheads Depreciation 8500 8500 0 Neither Favourable nor Unfavourable Supervision 4000 4200 -200 Unfavourable Total Cost of Production 242900 247200 -4300 Favourable Costs were not controlled, primarily owing to the actual variable overheads being substantially higher than those budgeted for.

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