Gundy Company expects to produce 1,273,200 units of Product XX in 2017. Monthly

Question

Gundy Company expects to produce 1,273,200 units of Product XX in 2017. Monthly production is expected to range from 76,600 to 123,200 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $6, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $1 In March 2017, the company incurs the following costs in producing 99,900 units: direct materials $426,600, direct labor $590,400, and variable overhead $1,007,000. Actual fixed costs were equal to budgeted fixed costs. Prepare a flexible budget report for March. (List variable costs before fixed costs.) GUNDY COMPANY Manufacturing Flexible Budget Report For the Month Ended March 31, 2017 Favorable Neither Favorable nor Unfavorable BudgetActual Were costs controlled?

Explanation / Answer

The cost is unfavorable hence counld not be controlled.

Budget Actual Units 99900 99900 Variable Cost: Direct material 399600 426600 27000 Unfavorable Direct labour 599400 590400 9000 Favorable Variable Overheads 999000 1007000 8000 Unfavorable Total variable Cost 1998000 2024000 26000 Unfavorable Fixed Cost: Depreciation 399600 399600 0 Supervision 99900 99900 0 Total Fixed Cost 499500 499500 0 Total Cost 2497500 2523500 26000 Unfavorable

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