Walton Medical Equipment Company makes a blood pressure measuring kit. Jason McC
ID: 2523618 • Letter: W
Question
Walton Medical Equipment Company makes a blood pressure measuring kit. Jason McCoy is the production manager. The production department’s static budget and actual results for 2019 follow:
Required
a. Convert the static budget into a flexible budget.
b. Calculate the variances.
Static Budget Actual Results Production in units 34,000 kits 35,600 kits Direct materials $ 241,400 $ 291,460 Direct labor 207,400 209,860 Variable manufacturing overhead 51,000 56,000 Total variable costs 499,800 557,320 Fixed manufacturing overhead 215,000 210,400 Total manufacturing cost $ 714,800 $ 767,720Explanation / Answer
Particulars Actual Spending variance Flexible budget Activity variance Static budget Production in units 35600 35600 34000 Variable overhead cost Direct material 291460 38700 U 252760 11360 U 241400 Direct labor 209860 7300 F 217160 9760 U 207400 Variable manufacturing overheads 56000 2600 U 53400 2400 U 51000 Total variable overheads 557320 34000 U 523320 23520 U 499800 Fixed manufacturing overehads 210400 4600 U 215000 0 215000 Total overhead cost 767720 29400 U 738320 23520 U 714800
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