Gundy Company expects to produce 1,204,800 units of Product XX in 2017. Monthly

Question

Gundy Company expects to produce 1,204,800 units of Product XX in 2017. Monthly production is expected to range from 89,700 to 125,700 units. Budgeted variable manufacturing costs per unit are direct materials $4, direct labor $6, and overhead $11. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $2. Prepare a flexible manufacturing budget for the relevant range value using 18,000 unit increments. (List variable costs before fixed costs.) GUNDY COMPANY Monthly Flexible Manufacturing Budget For the Year 2017 Activity Level Finished Units 8970 10770 12570 Variable Costs Direct Materials 35880 43080 Direct Labor 53820 64620 75420 98670 118470 138270 Total Variable Costs Y 188370 226170 263970 Fixed Costs Total Fixed Costs Y Total Costs

Explanation / Answer

Solution:

Gundy Company Monthly Flexible Manufacturing Budget For the year 2017 Particulars Activity Level - 89700 Activity Level - 107700 Activity Level - 125700 Activity Level: Finished units 89700 107700 125700 Variable Costs: Direct Materials $358,800.00 $430,800.00 $502,800.00 Direct Labour $538,200.00 $646,200.00 $754,200.00 Variable overhead $986,700.00 $1,184,700.00 $1,382,700.00 Total Variable Costs $1,883,700.00 $2,261,700.00 $2,639,700.00 Fixed Costs: Depreciation (1204800*$4/12) $401,600.00 $401,600.00 $401,600.00 Supervision (1204800*$2/12) $200,800.00 $200,800.00 $200,800.00 Total Fixed Costs $602,400.00 $602,400.00 $602,400.00 Total Costs $2,486,100.00 $2,864,100.00 $3,242,100.00

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