Adams Medical Equipment Company makes a blood pressure measuring kit. Jason McCo

Question

Adams 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.

Required A

Required B

Convert the static budget into a flexible budget. (Do not round intermediate calculations.)

Required B

Calculate the variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Static Budget Actual Results Production in units 23,000 kits 25,100 kits Direct materials $ 177,100 $ 231,170 Direct labor 154,100 161,870 Variable manufacturing overhead 34,500 39,550 Total variable costs 365,700 432,590 Fixed manufacturing overhead 211,000 206,200 Total manufacturing cost $ 576,700 $ 638,790

Explanation / Answer

Answer:-a)-

b)-

Adam Medical Equipment company Flexible budget 25100 Kits Particluars Amount $ Direct Material ($177100/23000 Kits)*25100 Kits 193270 Direct Labor ($154100/23000 Kits)*25100 Kits 168170 Variable Manufaturing Overhead ($34500/23000 Kits)*25100 Kits 37650 Total Variable costs 399090 Fixed Manufaturing Overhead 211000 Total Manufaturing Cost 610090

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