Using the budget data in the plant accountant’s report, compute the expected cos
ID: 2536508 • Letter: U
Question
Using the budget data in the plant accountant’s report, compute the expected cost per unit based on the budgeted volume of 18,000 units.
a. Using this information, create an alternative budget based on the actual volume of 14,000.
b. Compute variances between this alternative budget and the actual figures given by the plant accountant.
Budget Actual Variance Units Sales 18,00014,000 $864,000 $686,000 $178,000U 4,000 Variable manufacturing costs: $108,000 $85,400 $22,600 F Direct material Direct labor Indirect labor Idle time Cleanup time Miscellaneous supplies Total variable manufacturing cost 288,000246,00042,000 57,60044,40013,200 200 800 1,200 $484,000 $404,000$80,000 14,400 14,200 10,80010,000 4,000 5,200 $800 $512,800 $432,000 $80,800 $28,800$28,000 Variable shipping costs otal variable costs Contribution margin $351,200 $254,000 $97,200Explanation / Answer
Answers
Budgeted Data (total)
Budgeted Data (per unit)
Data for actual Level
(A)
(B = A / 18000 units)
( C = B x 14000 units)
Units
18000
14000
Sales
$ 8,64,000.00
$ 48.00
$ 6,72,000.00
Variable Manufacturing Costs:
Direct material
$ 1,08,000.00
$ 6.00
$ 84,000.00
Direct Labor
$ 2,88,000.00
$ 16.00
$ 2,24,000.00
indirect labor
$ 57,600.00
$ 3.20
$ 44,800.00
Idle Time
$ 14,400.00
$ 0.80
$ 11,200.00
Cleanup Time
$ 10,800.00
$ 0.60
$ 8,400.00
Miscellaneous Supplies
$ 5,200.00
$ 0.29
$ 4,060.00
Total variable manufacturing cost
$ 4,84,000.00
$ 26.89
$ 3,76,460.00
Variable Shipping costs
$ 28,800.00
$ 1.60
$ 22,400.00
Total variable costs
$ 5,12,800.00
$ 28.49
$ 3,98,860.00
Alternative Budget for Actual Volume
Units
14000
Sales
$ 6,72,000.00
Variable Manufacturing Costs:
Direct material
$ 84,000.00
Direct Labor
$ 2,24,000.00
indirect labor
$ 44,800.00
Idle Time
$ 11,200.00
Cleanup Time
$ 8,400.00
Miscellaneous Supplies
$ 4,060.00
Total variable manufacturing cost
$ 3,76,460.00
Variable Shipping Costs
$ 22,400.00
Total variable Costs
$ 3,98,860.00
Contribution Margin
$ 2,73,140.00
Non- Variable manufacturing costs:
Supervision
$ 57,600.00
Rent
$ 20,000.00
Depreciation
$ 60,000.00
Other
$ 10,400.00
Total Non variable manufacturing Costs
$ 1,48,000.00
Selling & Administrative costs
$ 1,12,000.00
Total Non variable & Programmed Costs
$ 2,60,000.00
Operating Income (Loss)
$ 13,140.00
Variance is Favourable when:
--Actual revenues/contribution margin/net income is MORE than Budgeted, OR
--Actual expenses/costs/net loss is LESS than Budgeted.
In other cases, variance is Unfavourable.
Alternative Budget for Actual Volume
Actual Data
Variances
Units
14000
14000
0
Sales
$ 6,72,000.00
$ 6,86,000.00
$ 14,000.00
Favourable
Variable Manufacturing Costs:
Direct material
$ 84,000.00
$ 85,400.00
$ 1,400.00
Unfavourable
Direct Labor
$ 2,24,000.00
$ 2,46,000.00
$ 22,000.00
Unfavourable
indirect labor
$ 44,800.00
$ 44,400.00
$ 400.00
Favourable
Idle Time
$ 11,200.00
$ 14,200.00
$ 3,000.00
Unfavourable
Cleanup Time
$ 8,400.00
$ 10,000.00
$ 1,600.00
Unfavourable
Miscellaneous Supplies
$ 4,060.00
$ 4,000.00
$ 60.00
Favourable
Total variable manufacturing cost
$ 3,76,460.00
$ 4,04,000.00
$ 27,540.00
Unfavourable
$ -
Variable Shipping Costs
$ 22,400.00
$ 28,000.00
$ 5,600.00
Unfavourable
Total variable Costs
$ 3,98,860.00
$ 4,32,000.00
$ 33,140.00
Unfavourable
Contribution Margin
$ 2,73,140.00
$ 2,54,000.00
$ 19,140.00
Unfavourable
Non- Variable manufacturing costs:
Supervision
$ 57,600.00
$ 58,800.00
$ 1,200.00
Unfavourable
Rent
$ 20,000.00
$ 20,000.00
$ -
Depreciation
$ 60,000.00
$ 60,000.00
$ -
Other
$ 10,400.00
$ 10,400.00
$ -
Total Non variable manufacturing Costs
$ 1,48,000.00
$ 1,49,200.00
$ 1,200.00
Unfavourable
$ -
Selling & Administrative costs
$ 1,12,000.00
$ 1,12,000.00
$ -
$ -
Total Non variable & Programmed Costs
$ 2,60,000.00
$ 2,61,200.00
$ 1,200.00
Unfavourable
Operating Income (Loss)
$ 13,140.00
$ (7,200.00)
$ 20,340.00
Unfavourable
Budgeted Data (total)
Budgeted Data (per unit)
Data for actual Level
(A)
(B = A / 18000 units)
( C = B x 14000 units)
Units
18000
14000
Sales
$ 8,64,000.00
$ 48.00
$ 6,72,000.00
Variable Manufacturing Costs:
Direct material
$ 1,08,000.00
$ 6.00
$ 84,000.00
Direct Labor
$ 2,88,000.00
$ 16.00
$ 2,24,000.00
indirect labor
$ 57,600.00
$ 3.20
$ 44,800.00
Idle Time
$ 14,400.00
$ 0.80
$ 11,200.00
Cleanup Time
$ 10,800.00
$ 0.60
$ 8,400.00
Miscellaneous Supplies
$ 5,200.00
$ 0.29
$ 4,060.00
Total variable manufacturing cost
$ 4,84,000.00
$ 26.89
$ 3,76,460.00
Variable Shipping costs
$ 28,800.00
$ 1.60
$ 22,400.00
Total variable costs
$ 5,12,800.00
$ 28.49
$ 3,98,860.00
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