The manufacturing overhead budget for Fleming Company contains the following ite

Question

The manufacturing overhead budget for Fleming Company contains the following items. Variable costs ------ Indirect materials $22,000 Indirect labor 12,000 Maintenance expense 10,000 Manufacturing supplies 6,000 Total variable $50,000 ----- Supervision $17,000 Inspection costs 1,000 Insurance expense 2,000 Depreciation 15,000 Total fixed $35,000 --- The budget was based on an estimated 2,000 units being produced. During the past month, 1,500 units were produced, and the following costs incurred. ...Variable costs: Indirect materials $22,500 Indirect labor 13,500 Maintenance expense 8,200 Manufacturing supplies 5,000 Total variable $49,200 --- Fixed costs Supervision $18,400 Inspection costs 1,200 Insurance expense 2,200 Depreciation 14,700 Total fixed $36,500 -- How much should have been spent during the month for the manufacture of the 1,500 units?

Explanation / Answer

Budgeted variable cost per unit : 50000/2000 = $ 25 per unit

Budgeted fixed cost remain same irrespective of change in volume .

Amount should have spent for manufacture of 1500 units =[Budgeted variable rate *actual units spent]+fixed cost

          = [25*1500]+35000

          = 37500+35000

           = $ 72500

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