You have just been hired by OpenDoor Corporation, the manufacturer of a revoluti

Question

You have just been hired by OpenDoor Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for Apri Actual Cost Cost Formula in April $17,200 plus $0.18 per machine-hourS22,180 Maintenance $39,100 plus $2.40 per machine-hour 77,100 S 7,000 Indirect labor $94,700 plus $1.50 per machine-hour $123,300 S 70,100 Utilities Supplies Depreciation $68,000 $0.40 per machine-hour During April, the company worked 16,500 machine-hours and produced 11,500 units. The company had originally planned to work 18,500 machine-hours during April Required 1. Prepare a flexible budget for April OpenDoor Corporation Flexible Budget For the Month Ended April 30 Flexible Budget Machine-hours Utilities Maintenance Supplies Indirect labor Depreciation Total

Explanation / Answer

1) Flexible budget :

Spending variance

Machine hour 16500 Utilities 20170 Maintenance 78700 Supplies 6600 Indirect labour 119450 Depreciation 68000 Total 292920

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