Problem 10-3A (Part Level Submission) HILL COMPANY Budget Report Assembling Depa

Question

Problem 10-3A (Part Level Submission)

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

$53,300

$52,200

$1,100

59,800

56,930

2,870

31,200

31,320

120

24,050

23,620

430

18,850

18,700

150

12,350

12,560

210

199,550

195,330

4,220

11,220

11,220

–0–

17,610

17,610

–0–

6,080

6,080

–0–

34,910

34,910

–0–

$234,460

$230,240

$4,220

The monthly budget amounts in the report were based on an expected production of 65,000 units per month or 780,000 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 63,000 units were produced.

(a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.)

=

per unit.

Problem 10-3A (Part Level Submission)

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

$53,300

$52,200

$1,100

F    Direct labor

59,800

56,930

2,870

F    Indirect materials

31,200

31,320

120

U    Indirect labor

24,050

23,620

430

F    Utilities

18,850

18,700

150

F    Maintenance

12,350

12,560

210

U       Total variable

199,550

195,330

4,220

F Fixed costs    Rent

11,220

11,220

–0–

N    Supervision

17,610

17,610

–0–

N    Depreciation

6,080

6,080

–0–

N       Total fixed

34,910

34,910

–0–

N Total costs

$234,460

$230,240

$4,220

F

The monthly budget amounts in the report were based on an expected production of 65,000 units per month or 780,000 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 63,000 units were produced.

(a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.)

The formula

=

$

+ variable costs of $

per unit.

Explanation / Answer

a) State the total monthly budgeted cost formula.

The formula= fixed costs $34,910 + total variable costs of $3.07 per unit.

b) Statement showing the monthly flexible budgeted report.

Difference

Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N

Manufacturing Costs Budgets Actuals

Difference

Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N

units 63,000 63,000 Direct material (53,300 / 65,000 * 63,000) = 51,660 52,200 540 U Direct labour (59,800 / 65,000 * 63,000) = 57,960 56,930 1,030 F Indirect material (31,200 / 65,000 * 63,000) = 30,240 31,320 1,080 U Indirect labour (24,050 / 65,000 * 63,000) = 23,310 23,620 310 U Utilities (18,850 / 65,000 * 63,000) = 18,270 18,700 430 U Maintenance (12,350 / 65,000 * 63,000) = 11,970 12,560 590 U Total variable cost 193,410 195,330 1,920 U Fixed cost: Rent 11,220 11,220 - N Supervision 17,610 17,610 - N Depreciation 6,080 6,080 - N Total fixed cost 34,910 34,910 - N Total Cost 228,320 230,240 1,920 U

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