Olive Company makes silver belt buckles. The company\'s master budget appears in
ID: 2512605 • Letter: O
Question
Olive Company makes silver belt buckles. The company's master budget appears in the first column of the table. Required: Complete the table by preparing Olive's flexible budget for 4,000, 6,000, and 7,000 units. (Round your intermediate calculations to 2 decimal places.) Master Budget Flexible Budget Flexible Budget Flexible Budget (5,000 Units) (4,000 Units) (6,000 Units) (7,000 Units) Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 1,000 2.500 1,500 18,900 23,900 Total manufacturing costExplanation / Answer
Particulars
Variable Cost
Master Budget
Flexible Budget
Flexible Budget
Flexible Budget
Units
Rate per Unit
5,000.00
4,000.00
6,000.00
7,000.00
Direct Material
$ 0.20
$ 1,000.00
$ 800.00
$ 1,200.00
$ 1,400.00
Direct Labor
$ 0.50
$ 2,500.00
$ 2,000.00
$ 3,000.00
$ 3,500.00
Variable Manufacturing Overhead
$ 0.30
$ 1,500.00
$ 1,200.00
$ 1,800.00
$ 2,100.00
Fixed Manufacturing Overhead
$ 18,900.00
$ 18,900.00
$ 18,900.00
$ 18,900.00
Total Manufacturing Cost
$ 23,900.00
$ 22,900.00
$ 24,900.00
$ 25,900.00
Note:
Particulars
Variable Cost
Master Budget
Flexible Budget
Flexible Budget
Flexible Budget
Units
Rate per Unit
5,000.00
4,000.00
6,000.00
7,000.00
Direct Material
$ 0.20
$ 1,000.00
$ 800.00
$ 1,200.00
$ 1,400.00
Direct Labor
$ 0.50
$ 2,500.00
$ 2,000.00
$ 3,000.00
$ 3,500.00
Variable Manufacturing Overhead
$ 0.30
$ 1,500.00
$ 1,200.00
$ 1,800.00
$ 2,100.00
Fixed Manufacturing Overhead
$ 18,900.00
$ 18,900.00
$ 18,900.00
$ 18,900.00
Total Manufacturing Cost
$ 23,900.00
$ 22,900.00
$ 24,900.00
$ 25,900.00
Note:
- Variable cost like Direct Material, Direct Labor and variable overhead will change according to the volume.
- Fixed Manufacturing Overhead will remain same irrespective of volume.
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