Olive Company makes silver belt buckles. The company’s master budget appears in

Question

Olive Company makes silver belt buckles. The company’s master budget appears in the first column of the table.

Required:
Complete the table by preparing Olive’s flexible budget for 5,200, 7,200, and 8,200 units. (Round your intermediate calculations to 2 decimal places.)

Master Budget (6,200 Units) Flexible Budget (5,200 Units) Flexible Budget (7,200 Units) Flexible Budget (8,200 Units) Direct materials $1,860 Direct labor 2,480 Variable manufacturing overhead 2,480 Fixed manufacturing overhead 17,600 Total manufacturing cost $24,420

Explanation / Answer

NOTE:Variable cost per unit and Total fixed cost do not change with change in units

Direct material/unit=(1860/6200)=$0.3

Direct labor=(2480/6200)=0.4

Variable manufacturing overhead=(2480/6200)=0.4

Master Budget (6,200 Units) Flexible Budget (5,200 Units) Flexible Budget (7,200 Units) Flexible Budget (8,200 Units) Direct materials $1,860 1560 2160 2460 Direct labor 2,480 2080 2880 3280 Variable manufacturing overhead 2,480 2080 2880 3280 Fixed manufacturing overhead 17,600 17600 17600 17600 Total manufacturing cost $24,420 23320 25520 26620

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