Mussatto Company expects to produce 50,000 units of product IOA during the curre
ID: 2450544 • Letter: M
Question
Mussatto Company expects to produce 50,000 units of product IOA during the current year. Budgeted variable manufacturing costs per unit are direct materials $7, direct labor $13, and overhead $18. Annual budgeted fixed manufacturing overhead costs are $96,000 for depreciation and $45,600 for supervision.
In the current month, Mussatto produced 6,000 units and incurred the following costs: direct materials $38,850, direct labor $76,440, variable overhead $116,640, depreciation $8,000, and supervision $4,000.
Prepare a flexible budget report. (List variable costs before fixed costs.)
Mussatto Company
Manufacturing Flexible Budget Report
Difference
Budget
Actual
Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)
.
Mussatto Company
Manufacturing Flexible Budget Report
Difference
Budget
Actual
Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)
Explanation / Answer
Flexible Budget Actual Variance
Units produced 6000 6000
Direct Material - $7 / unit $ 42000 $38850 $3150 F
Direct Labour -$13 / unit $ 78000 $76440 $1560 F
Variable overhead - $18/unit $108000 $116640 $8640 U
Total Variable Manufacturing cost $228000 $231930 $ 3930 U
Fixed cost
Depreciation $8000 $8000
Supervision $3800 $4000
----------- $11800 $12000 $200 U
------------ ------------- -------------
Total Manufacturing cost $239800 $243930 $4130U
-------------- -------------- --------------
Flexible budget figures are arrived at by applying the budgeted cost per unit to the actual units produced.
Budgeted fixed cost per month is arrived at by dividing the budgeted cost per year by 12.
F-Favourable variance and U-unfavourable variance.
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