The following overhead data are for the Metro Manufacturing Company. Actual cost
ID: 2578847 • Letter: T
Question
The following overhead data are for the Metro Manufacturing Company. Actual costs Planning budget Activity level (in units) 360 340 Variable costs: Indirect materials $4,182 $4,148 total ($12.20 Per Unit) Electricity $2,536 $2,414 total ($7.10 per Unit) Fixed costs: Administration $6,540 $6,600 Rent $6,310 $6,250 Required: Construct a flexible budget performance report that would be useful in assessing how well costs were controlled in this department. Please note, this report is for expenses only. There are no revenues. Be sure to list your expense totals.
Explanation / Answer
Metro Manufacturing Company
Flexible Budget Performance report.
Flexible Budget - Flexible budget is a type of useful budget which is adjusted on changes in level of activity. It is more useful than the conventional static budget.
Flexible budget helps in calculating variances and hence is useful in assessing the control on cost where the actual performances deviates from predicted performances.
Flexible budget advantages:-
1) Effective adjustment for predictions
2) Adapting the change
3) Cost control
4) Effective evaluation
5) Efficient planning and decision making.
Particulars Amount Variable costs :- Indirect Material ($12.2 per unit * 360 units) $4392 Electricity expenses ($7.1 per unit * 360) $2556 Fixed Costs Administration costs $6600 Rent costs $6250 Total cost $19798Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.