E9-2 Preparing Flexible Budget for Manufacturing Costs [LO 9-2] Olive Company ma

Question

E9-2 Preparing Flexible Budget for Manufacturing Costs [LO 9-2]

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 5,700, 7,700, and 8,700 units. (Round your intermediate calculations to 2 decimal places.)

Master Budget (6,700 Units) Flexible Budget (5,700 Units) Flexible Budget (7,700 Units) Flexible Budget (8,700 Units) Direct materials $1,340 Direct labor 3,350 Variable manufacturing overhead 2,010 Fixed manufacturing overhead 18,100 Total manufacturing cost $24,800

Explanation / Answer

Direct material/unit=(1340/6700)=$0.2

Direct labor/unit=(3350/6700)=$0.5

Variable manufacturing overhead=(2010/6700)=$0.3

NOTE:Total fixed cost and variable cost/unit do not change with change in units.

Master Budget (6,700 Units) Flexible Budget (5,700 Units) Flexible Budget (7,700 Units) Flexible Budget (8,700 Units) Direct materials $1,340 1140 1540 1740 Direct labor 3,350 2850 3850 4350 Variable manufacturing overhead 2,010 1710 2310 2610 Fixed manufacturing overhead 18,100 18100 18100 18100 Total manufacturing cost $24,800 23800 25800 26800

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