HILL COMPANY Budget Report Assembling Department For the Month Ended August 31,

Question

HILL COMPANY
Budget Report
Assembling Department
For the Month Ended August 31, 2014

Difference

Manufacturing Costs

Budget

Actual

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

$55,440

$54,340

$1,100

60,480

57,250

3,230

30,240

30,450

210

18,900

18,450

450

17,640

17,470

170

8,190

8,500

310

190,890

186,460

4,430

10,480

10,480

–0–

17,900

17,900

–0–

6,040

6,040

–0–

34,420

34,420

–0–

$225,310

$220,880

$4,430

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HILL COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended August 31, 2012

Difference

Budget

Actual Costs

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

Hill Company uses budgets in controlling costs. The August 2014 budget report for the company’s Assembling Department is as follows.

HILL COMPANY
Budget Report
Assembling Department
For the Month Ended August 31, 2014

Difference

Manufacturing Costs

Budget

Actual

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

Variable costs    Direct materials

$55,440

$54,340

$1,100

F    Direct labor

60,480

57,250

3,230

F    Indirect materials

30,240

30,450

210

U    Indirect labor

18,900

18,450

450

F    Utilities

17,640

17,470

170

F    Maintenance

8,190

8,500

310

U       Total variable

190,890

186,460

4,430

F Fixed costs    Rent

10,480

10,480

–0–

N    Supervision

17,900

17,900

–0–

N    Depreciation

6,040

6,040

–0–

N       Total fixed

34,420

34,420

–0–

N Total costs

$225,310

$220,880

$4,430

F
The monthly budget amounts in the report were based on an expected production of 63,000 units per month or 756,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 61,000 units were produced.

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Explanation / Answer

HILL COMPANY
Flexible Budget Report (For 61000 units)
Assembling Department
For the Month Ended August 31, 2014

Difference

Manufacturing Costs

Budget

Actual

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

$53,680

$54,340

$660

58,560

57,250

1310

29,280

30,450

1170

18,300

18,450

150

17,080

17,470

370

7,930

8,500

570

184,830

186,460

1630

10,480

10,480

–0–

17,900

17,900

–0–

6,040

6,040

–0–

34,420

34,420

–0–

$219,250

$220,880

$1630

The monthly budget amounts in the report were based on an expected production of 63,000 units per month or 756,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 61,000 units were produced.

HILL COMPANY
Flexible Budget Report (For 61000 units)
Assembling Department
For the Month Ended August 31, 2014

Difference

Manufacturing Costs

Budget

Actual

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

Variable costs    Direct materials

$53,680

$54,340

$660

U    Direct labor

58,560

57,250

1310

F    Indirect materials

29,280

30,450

1170

U    Indirect labor

18,300

18,450

150

U    Utilities

17,080

17,470

370

U    Maintenance

7,930

8,500

570

U       Total variable

184,830

186,460

1630

U Fixed costs    Rent

10,480

10,480

–0–

N    Supervision

17,900

17,900

–0–

N    Depreciation

6,040

6,040

–0–

N       Total fixed

34,420

34,420

–0–

N Total costs

$219,250

$220,880

$1630

U

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