Wade Company estimates that it will produce 6,900 units of product IOA during th

Question

Wade Company estimates that it will produce 6,900 units of product IOA during the current month. Budgeted variable manufacturing costs per unit are direct materials $7, direct labor $13, and overhead $17. Monthly budgeted fixed manufacturing overhead costs are $7,600 for depreciation and $3,700 for supervision. In the current month, Wade actually produced 7,400 units and incurred the following costs: direct materials $45,300, direct labor $88,600, variable overhead $125,900, depreciation $7,600, and supervision $3,990. Prepare a static budget report. Hint: The Budget column is based on estimated production while the Actual column is the actual cost incurred during the period.

Explanation / Answer

Answer)Preparation of static budget

static budget($)

[6900 units]

(1)

Actual Amount($)

[7400 units]

(2)

Variances

[500 units favourable]

[(1)-(2)]

48300

[6900 units×$7]

89700

[6900units ×$13]

117300

[6900 units×$17]

Particulars unit costs($)

static budget($)

[6900 units]

(1)

Actual Amount($)

[7400 units]

(2)

Variances

[500 units favourable]

[(1)-(2)]

Direct materials(a) 7

48300

[6900 units×$7]

45300 3000 favourable Direct labour (b) 13

89700

[6900units ×$13]

88600 1100 favourable Variable Overhead (c) 17

117300

[6900 units×$17]

125900 8600 unfavorable Total variable overhead [(a)+(b)+(c)](X) 255300 259800 4500 adverse Depreciation(d) 7600 7600 0 Supervision(e) 3700 3990 290 unfavorable Total fixed Overhead [(d)+(e)](y) 11300 11590 290 unfavorable Total overhead[(x)+(y)] 266600 271390 4790 unfavorable

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