The following budgeted and actual volume and cost data are for January of this y

Question

The following budgeted and actual volume and cost data are for January of this year:

Budget
Actual
Volume 20,000 18,000

Budgeted manufacturing costs:
Variable costs per unit:
Direct materials $40.00
Direct labor 12.00
Overhead 2.25
Total fixed overhead costs $150,000

Actual manufacturing costs:
Direct materials $1,320,000
Direct labor 396,000
Variable overhead 82,000
Fixed overhead 175,000


a. Prepare a static budget analysis of production costs for January of this year.
b. Prepare a flexible budget analysis of production costs for January of this year.

Explanation / Answer

Budgeted Static Budget: Actual Results Static Budget amount per unit 20000 Units 18000 units Variance Direct Material 40 800,000 720,000 80,000 Direct Labor 12 240,000 216,000 24,000 Overhead 2.25 45,000 40,500 4,500 Total Variable Cost 54.25 1,085,000 976,500 108,500 Fixed Overhead Cost 150000 175000 -25,000 Total Cost 1,235,000 1,151,500 83,500

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