Zelmer Company uses budgets in controlling costs. The August 2010 budget report
ID: 2443948 • Letter: Z
Question
Zelmer Company uses budgets in controlling costs. The August 2010 budget report for the company's Assembling Department is as follows.
For the Month Ended August 31, 2010
Difference
Manufacturing Costs
Budget
Actual
Unfavorable U
10,200
10,600
400
171,000
167,200
3,800
7,940
7,940
-0-
41,240
41,240
-0-
$212,240
$208,440
$3,800
The monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 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 58,000 units were produced.
State the total monthly budgeted cost formula. (Round unit costs to 2 decimal places, i.e. 1.25.)
The formula is fixed costs $ plus variable costs of $ per unit.
Complete the budget report for August using flexible budget data. (If answer is zero, please enter 0, do not leave any fields blank. Round unit costs to 2 decimal places, i.e. 0.95.)
For the Month Ended August 31, 2010
Unfavorable U
$
$
$
In September, 64,000 units were produced. Complete the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (Round unit costs to 2 decimal places, i.e. 0.95.)
For the Month Ended September 30, 2010
Unfavorable U
$
$
$
ZELMER COMPANY Budget Report Assembling DepartmentFor the Month Ended August 31, 2010
Difference
Favorable FManufacturing Costs
Budget
Actual
Unfavorable U
Variable costs Direct materials $ 48,000 $ 47,000 $1,000 F Direct labor 54,000 51,200 2,800 F Indirect materials 24,000 24,200 200 U Indirect labor 19,800 19,400 400 F Utilities 15,000 14,800 200 F Maintenance10,200
10,600
400
U Total variable171,000
167,200
3,800
F Fixed costs Rent 14,800 14,800 -0- Supervision 18,500 18,500 -0- Depreciation7,940
7,940
-0-
Total fixed41,240
41,240
-0-
Total costs$212,240
$208,440
$3,800
FExplanation / Answer
Budget for August Budgeted for 60000 units Budgeted for 58000 units Actual production for 58000 Difference Manufacturing costs Direct materials $48,000 $46,400 $47,000 $600 U Direct labor $54,000 $43,200 $51,200 $8000U Indirect materials $24,000 $23,200 $24,200 $1000 U Indirect labor $19,800 $19,140 $19,400 $260U Utilities $15,000 $14,500 $14,800 $300U Maintenance $10,200 $9,860 $10,600 $740 Total variable $171,000 $156,300 $167,200 $10900U Fixed costs Rent $14,800 $14,800 $14,800 $0 Supervision $18,500 $18,500 $18,500 $0 Depreciation $7,940 $7,940 $7,940 $0 Total fixed costs $41,240 $41,240 $41,240 $0 Total costs $212,240 $197,540 $208,440 $10900U Budget for September ` Bugeted data for 60000 Budgeted data for 64000 units Actual Data for 64000 units Differences Manufacturing costs units Direct materials $48,000 $51,200 $57,048 $5848U Direct labor $54,000 $57,600 $62,146 $4546U Indirect materials $24,000 $25,600 $29,373 $3773U Indirect labor $19,800 $21,120 $23,547 $2427U Utilities $15,000 $16,000 $17,964 $1964U Maintenance $10,200 $10,880 $12,866 $1986U Total variable $171,000 $182,400 $202,944 $20544U Fixed costs Rent $14,800 $14,800 $14,800 $0 Supervision $18,500 $18,500 $18,500 $0 Depreciation $7,940 $7,940 $7,940 $0 Total fixed costs $41,240 $41,240 $41,240 $0 Total costs $212,240 $223,640 $244,184 $20544U Note: For Actual expenses of September , take Actual expenses of August for 58000 units, find out cost per unit of actual production: and increase the same by10%, Example: Direct materials Actual expenses for 58000 units in August is $47000, to findout actual expenses of September for 64000 units 47000/58000*110/100*64000=$57048 work out all other expenses in this manner.
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