Brief Exercise 22-5 Gundy Company expects to produce 1,273,200 units of Product

Question

Brief Exercise 22-5 Gundy Company expects to produce 1,273,200 units of Product XX in 2017. Monthly production is expected to range from 83,300 to 115,900 units. Budgeted variable manufacturing costs por unit are: direct materials $4, direct labor $7, and ovara manufacturing costs per unit for depreciation arc $6 and for supervision are $3 .ucgeted fied company o. Actusl fi the following costs in March. (List variable costs before fixed costs.) 2,200, and ariable $1,104,60 Prepare flexible budget report for For the Month Ended March 31, 2017 Favorable Neither Favorable nor Unfavorable Budget Actual Ware costs controlled? Click if you would like to show work for this question:

Explanation / Answer

Ans. GUNDY COMPANY Manufacturing Flexible Budget Report For the Month Ended March 31, 2017 Budget Actual Variance Fav./Unf. Units 96600 96600 Variable costs: Direct Material 398400 425400 27000 U Direct Labor 697200 687200 10000 F Variable Overhead 1095600 1104600 9000 U Total Variable Costs (A) 2191200 2217200 26000 U Fixed Costs: 0 Depreciation 636600 636600 0 no effect Supervision 318300 318300 0 no effect Total Fixed Costs (B) 954900 954900 0 no effect Total Costs (A+B) 3146100 3172100 26000 U *Calculations for flexible budget: Variable costs: Direct Material 99600*4 Direct Labor 99600*7 Variable Overhead 99600*11 Fixed Costs: Depreciation 1273200 * 6 * 1/12 Supervision 1273200 * 3 * 1/12 *The report is made for one month only so the fixed costs are calculated on monthly basis, because the expected units are given for 2017 (annual). *Fixed costs in actual results are same as budgeted.

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