HILL COMPANY Budget Report Assembling Department For the Month Ended August 31,
ID: 2424649 • Letter: H
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)
$51,660
$50,560
$1,100
59,220
56,530
2,690
25,830
25,950
120
23,940
23,480
460
18,270
18,170
100
10,080
10,180
100
189,000
184,870
4,130
12,480
12,480
–0–
18,420
18,420
–0–
5,990
5,990
–0–
36,890
36,890
–0–
$225,890
$221,760
$4,130
(a)
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)
$51,660
$50,560
$1,100
F Direct labor59,220
56,530
2,690
F Indirect materials25,830
25,950
120
U Indirect labor23,940
23,480
460
F Utilities18,270
18,170
100
F Maintenance10,080
10,180
100
U Total variable189,000
184,870
4,130
F Fixed costs Rent12,480
12,480
–0–
N Supervision18,420
18,420
–0–
N Depreciation5,990
5,990
–0–
N Total fixed36,890
36,890
–0–
N Total costs$225,890
$221,760
$4,130
FThe 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.
Explanation / Answer
The formula = Total fixed cost + variable cost per unit = $ 36,890 + variable costs $ 3 per unit.
Budgeted variable cost per unit = 189,000 / 63,000 = $ 3.
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