Wyckam Manufacturing Inc. has provided the following information concerning its

Question

Wyckam Manufacturing Inc. has provided the following information concerning its manufacturing costs:

For example, utilities should be $2,000 per month plus $0.25 per machine-hour. The company expects to work 4,200 machine-hours in June. Note that the company’s direct labor is a fixed cost.

Required:

Prepare the company’s planning budget for June.

Fixed Cost
per Month Cost per
Machine-Hour Direct materials $ 5.50 Direct labor $ 42,900 Supplies $ 0.40 Utilities $ 2,000 $ 0.25 Depreciation $ 14,900 Insurance $ 11,900

Explanation / Answer

Wyckam Manufacturing Inc.
                      Planning Budget for Manufacturing Cost
                             For the Month Ended June 30
Direct materials                               $23,100
Direct labor                                       $42,900
Supplies                                              $1,680
Utilities                                               $3,050
Depreciation                                      $14,900
Insurance                                          $11,900
Total manufacturing cost                $97,530

Explanation
Direct materials - ($5.5 × 4,200) = $23,100
Supplies - ($0.40 × 4,200) = $1,680
Utilities - ($2000 + ($0.25 ×4,200)) = $3,050

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